To predict the future of B2B payments, look to its past. Unlike consumer payments, B2B payments have traditionally been very complex, time-consuming, manual, and expensive. So it only makes sense that B2B payments will evolve to solve different issues than the pain points consumer payments have solved. But what are the trends driving the future of business payments?
The evolution of consumer payments may be able to tell us what to expect in terms of the business payment experience. As B2B customers use consumer payment technology in their personal lives, the more and more they will expect those same features in their business lives. Customer expectations, as much as changes in regulation and technology advancements, are going to ultimately drive the streamlining of business payments.
Other business payments developments to watch are:
When it comes to meeting customer expectations, it’s all about one word: data. The ability to derive actionable insights from good, permissioned data will be absolutely crucial to better serving clients while enabling stronger fraud prevention and cyber security.
Companies will start to use large amounts of data to analyze customer behaviors, moving from the traditional model of hindsight to forecasting with artificial intelligence. They’ll also use AI to analyze what is happening during the course of the transaction to prevent fraud and improve cyber security.
Regulations will also force everyone to become more nimble and embrace digital. For example, PSD2, the second Payment Services Directive developed by the EU, will open up users’ bank data to third parties and the effect will be banking as a service. Look at how companies like Airbnb, Uber, and Apple became significant players in accommodations, transport, and music without owning properties, vehicles, or content themselves. It will be the same in banking. Banks will enable other businesses to build banking services on top of their own label to produce a banking infrastructure that is their own. PSD2 allows all of this to happen because one of the fundamental principles of PSD2 is access.
The next five years should see the elimination, or at least obsolescence, of the long, complex payment cycle. Artificial intelligence is going to come to every part of the payment process, enabling payments to be made faster, easier, and with more confidence on both sides of the transaction. Payment terms will go from 30, 60, or 90 days down to 24 hours. While some companies may prefer to hold onto their working capital for 90 days, competition from other firms offering to pay faster should drive payment times down across the board.
Download “The Future of Business Payments” ebook to discover more insights from global industry thought leaders on the opportunities and obstacles facing the digital transformation of B2B payments.