Digital Transactions Authoritative, insightful and timely information for payments professionals
Digital payments have revolutionized consumer markets – and B2B has just as much to gain
The momentum driving the digital payments revolution has come predominantly from consumers, who are demanding faster, more varied and more convenient ways to pay. Digital payments have delivered on expectations, creating a fast, frictionless payment experience.
While the business-to-business (B2B) market is still years behind consumer markets in terms of digital payments, these businesses are taking notice. Where consumers can already choose from a dizzying array of digital payment channels, from online banking to peer-to-peer networks, digital payments in B2B markets is still in its relative infancy. Only one-third of B2B spend globally is processed electronically (compared with two-thirds of expenditure in B2C) and checks still represent more than half of the $120 trillion of B2B payments made worldwide very year[1].
But that is rapidly changing. The gross merchandise volume of B2B e-commerce transactions increased from $5.8 trillion in 2013 to $12.2 trillion in 2019[2], and in the U.S, checks now account for around 40% of B2B transactions, compared with 80% in 2014[3].
B2B customers have seen what is possible in the consumer space and are questioning why fast, frictionless service isn’t part of the B2B user experience. Manual processes cost time and money; the average cost to businesses of processing a single e-invoice is 81% lower than the paper alternative, and 77% faster.[4]
Businesses of all sized have much to gain by migrating to digital payments, including:
Operational efficiency. Automated processes are faster and more accurate, significantly reducing the need for manual intervention and checks, and allowing businesses to focus resources and talent elsewhere. As a result, Goldman Sachs believes that B2B digital payment solutions will create a $1.5 trillion uplift in productivity among small businesses globally.
Better customer relationships. Digital payments are convenient for customers – payments can be made quickly and at a time and place that works for them. Accurate, faster payments and invoice processing mean better business relationships, built on trust.
Intelligence and insight. Digital processes can provide unique insights into the inbound and outbound payment flows in a business, and to the behavior and preferences of customers – leading to better decision-making. Digital payment solutions in consumer markets, for example, have allowed companies to use data analysis to identify and offer the best payment options for particular customers.
Greater visibility. Data-driven digital transformation brings predictability and visibility to the payments process, providing management with an accurate picture of liquidity – the basis for better risk management and more efficient use of working capital.
The appetite for digital innovation is not restricted to payments; businesses are looking at every stage in the buyer-supplier process to see what can be automated, from onboarding customers to KYC and payment reconciliation. Digital transformation is causing companies to rethink every process, as they look for efficiency gains and more insight from data across the enterprise.
Payments solutions from Accuity, a LexisNexis Risk Solutions company, provide instant access to payments validation and routing data covering financial institutions worldwide to eliminate failed payment costs, improve customer experience and maximize straight-through-processing rates.
[1] Pymnts.com, February 2019 Mastercard Q4 Continues Contactless, B2B Growth | PYMNTS.com
[2] Statista.com • Global B2B e-commerce GMV 2019 | Statista
[3] 2019 AFP Electronic Payments Survey 2019 AFP Electronic Payments Survey (afponline.org)
[4] State of ePayables 2019, Ardent Partners The 2019 State of ePayables Market Research Report is Now Available! (ardentpartners.com)
