That old piece of trivia that paper money carries more germs than your toilet seat has never been more relevant.
Society was already trending away from physical bills, but recent studies have found that 60% of consumers plan to use digital payments instead of physical in the future because of COVID-19. It’s official: cashless and contactless payments are here to stay.
So what does the future look like for B2B transactions?
The reality is that switching from tried-and-true manual processes to digital or electronic payments won’t be as easy as it is for the B2C world. But it’s inevitable, it’s necessary, it’s better for the industry in the long term — and viable solutions already exist.
The B2B payments industry, though filled with innovative technology and fintech companies, has typically lagged behind in the adoption of electronic payments. That includes cards, digital bank payments, or even electronic check deposits.
It’s pretty shocking just how many businesses still rely on physical checks for sending and receiving payments. For one thing, they’re expensive, up to $20 each. For another, they’re manual and slow, reliant on the mail.
The culprit, aside from pure inertia among legacy systems and corporations, is the friction between accounts payable and receivable. To send an online payment, a company needs to build the appropriate infrastructure and hope that the receiving vendor has built the necessary infrastructure to receive it — and that all of their other vendors have, too.
That’s true for every type of payment that the company wants to send. And then there are other hurdles, like the fact that credit cards are expensive to accept at high and low-value payments, so companies hesitate to accept them at all.
On the surface, it doesn’t seem worth the effort. Everyone can process a check, so why not stick to that?
But COVID-19 trends are forcing the issue. Here are some of the top ones we’ve seen:
Payments are coming online at a rapid rate. From our perspective as industry insiders, we’ve actually seen the B2B industry shift far more than the consumer payments industry — which had already largely digitized — in recent months as more businesses become reliant on digital banking.
In today’s environment and with the advent of more flexible digital payment solutions tailor-made for B2B needs, it’s time for manual payments to evolve.
The good news is, much of that shift is already underway. While there isn’t a B2B Venmo equivalent (although who knows — as Banking-as-a-Service grows, will future generations know what a bank is?), checks should by no means be the default option, particularly for SMBs.
Check out these three examples of electronic payment processing solutions that accomplish the same thing, without the hassle or cost:
1. ACH Payments (or similar)
By no means new, Automated Clearing House (ACH) payments are a great option for electronic B2B payments in the US — you can find similar versions in other regions, like SEPA in the EU. It’s a way to transfer money from your business’s bank account to your vendor’s via either a debit or credit transaction.
Digital banks and Fintechs are offering new ways to push ACH payments in an effort to make the transition to electronic payments easier. For instance, Currencycloud partners with Dwolla, a Fintech that offers easy connectivity to ACH, to connect customers to both a U.S. and an international payments network.
2. Card-to-Check Solutions
Some new market entrants are solving that AP-to-AR friction by enabling companies to pay a bill by card on the front end, then providing a middle-man channel that mails the supplier a check on the back end.
It’s the ideal solution for companies that are stuck inside and struggling to manage the logistics of physical payments right now, bridging the gap between digital payment and physical reception.
3. Digital Banks
More and more, the most comprehensive and tailored solution for B2B payments will be a digital bank. This could be a digitally native bank that specializes in commercial clients, or it could be a B2B fintech platform that evolved into a digital bank by integrating with additional value-add services.
Either way, these providers supply you with all the infrastructure you need to send and receive payments so that you don’t have to build it yourself. As the popularity of these services grows, electronic payment processing will grow exponentially in the B2B payment industry.
There Are Substantial Benefits to Electronic Payment Processing
Right now, electronic or digital payments have one benefit that supersedes any other: they keep people safe, indoors, and away from unnecessary physical contact.
Long term, they’ll have other benefits, too.
This evolution comes with a shift toward digital systems that are automated, convenient, and efficient. Suppliers won’t have to wait for a check that’s “in the mail” because everything can go out in mere seconds to all suppliers. Businesses can automate reconciliation across currencies. Data can be readily fed into any type of system for any type of output. In short, payments won’t be the manual backlog that they are now.
The cost of payments at scale will go down, too. When you can optimize your processes and cut down on delays, not to mention find a digital solution that cuts out all physical expenses like checks, you can ensure that your electronic payments are working for you as effectively as possible.
That’s not to mention the broader implications of a more digital, cashless society, such as environmental sustainability and financial inclusion, where individuals and businesses have easy access to useful, affordable financial services that meet their needs. It’s a vision that digital banking is poised to deliver, and it’s made possible by tools like electronic payments.
The post Why electronic payment processing is the future of digital banking appeared first on Currencycloud.
Original Source: currencycloud.com
Today, everyone relies heavily on a wide range of different tools to manage social selling campaigns for our clients. As you can imagine, it becomes quite a pretty complicated task once you are managing dozens of different social accounts across many brands. To succeed, you need a suite of online helpers. Out of the more… Continue reading Generate More Leads With These 3 Tools
In today’s advertising market there’s a million-dollar question that everyone has. “How can I increase my sales WITHOUT increasing my ad spend?” Legends say those who are capable of doing this have already ascended to marketing mount olympus and have tea time daily with Russel Brunson and Gary Vee… Seriously though. Especially after 2020, ad… Continue reading How We Added $500,000 In Sales With 3 Stupid Simple Split Tests
If you do a Google search for “PPC agency,” you can find thousands of businesses selling AdWords services. Why? Because Google AdWords is complicated and tough to navigate for new PPC marketers and small businesses. Which is why you might be considering getting a Google Adwords certification. Since Google is the most popular search network on… Continue reading 4 Reasons Why You Should Get AdWords Certified
Have you ever been scrolling through Instagram and been drawn to a product you’ve seen repeatedly? Have you ever felt compelled to stop at the coffee shop with a line out the door versus the empty one around the corner? If you’ve ever experienced a sudden fear of missing out when you see other people… Continue reading How to Use Social Proof to Boost Your Online Marketing
You don’t need a business degree to know that your company needs a marketing plan. Successful startups dedicate months to designing a strategy for conversions and online visibility. They run focus groups and conduct market research to guide their execution, but they don’t stop there. Even niche businesses aren’t so scarce anymore. Everyone has someone… Continue reading What Marketing Competitor Analysis Is and How to Do it
Companies are giving employees more time, money, and flexibility to recognize the new reality of 100% remote work. The future of work is a hybrid solution that will include both remote and in-person work, according to Rhiannon Staples, chief marketing officer at the people management platform Hibob. “There is still value in meeting face to… Continue reading 10 new perks of remote work
Going freelance can be a scary prospect, as there are so many unknowns. Will you find enough clients to keep the wolf from the door? How much will you earn? How often will you get paid? 1. You’re running a business Many people think that switching from being a staff member to a freelancer… Continue reading What they never tell you about becoming a freelance creative
Every blogger wants their blog to rank in the top position in Google search results since users commonly select results contained on the first page, especially those in one of the top 3 positions, as you can see in the graphic below. And, for years, the Google search algorithm made content king. This explains why… Continue reading AI Content Creator: 5 Ways it Helps Your Blog Grow
Managing social media shouldn’t be a pain, and it shouldn’t monopolize your entire schedule. Social media platforms are meant to be a fun new way to engage with others within your network. When you apply the right strategies, you can grow your following organically, which can impact your entire business. It never hurts to have… Continue reading 10 Awesome Social Media Tools to Try This Year
Blockchain and cryptocurrency are perhaps the youngest industries in the modern economy. Bitcoin was launched in 2008 and most cryptocurrency businesses and blockchain projects are a few years old. However, the rise of this small industry has been great and now there is an entire sector of blockchain-related services and tangible businesses. One of such… Continue reading The Need for Marketing and PR For Blockchain Companies