Fee Traits and Know-how Are Evolving: What Enterprise House owners Have to Know
The payments industry has long been reliant on disruptions. And finally something has changed – at least partly due to the coronavirus pandemic.
On the consumer side, the NRF states that 67% of retailers in their consumer payment status are now accepting some form of contactless payment. This includes 58% who accept contactless cards, up from 40% last year, and 56% who accept payments with digital wallets on mobile phones, up from 44%. This year, no-touch payments among retailers surveyed increased 69%.
There is also movement in the B2B area – also fueled by the Covid-19 crisis, in which companies have only slowly adjusted to automated payments in the past.
To get a glimpse of the trend and how it is affecting businesses, I reached out to Josh Cyphers, president of Nvoicepay, a financial technology company specializing in intelligent payments automation.
What are some of the big trends in B2B payments?
Josh Cyphers: Paper reviews are still paramount when it comes to B2B payments, but Covid-19 created a compelling event that really pushes companies to fully automate payments. This is a significant shift. Over the past 10 to 15 years, the use of personal checks has decreased very slowly. According to the AFP Electronic Payments Survey Report 2019, companies made 42% of their supplier payments by check in 2019, compared to 81% in 2004.
Now that accounts payable departments are working remotely, companies are trying to minimize the manual labor that requires driving to the office or employee’s home to get them to sign checks. Suppliers would prefer to pay electronically because they get the money faster and don’t have to go to the bank. It will be interesting to see the 2020 AFP report and see if the pandemic pushes organizations to finally give up controls.
The other thing that happens is an extreme focus on cash management. Given the economic climate, many companies are looking for ways to save money. They investigate the timing of payments, the extension of payment terms to suppliers, or the delay in payments. With an automated solution, all payment approvals and workflows are online and you have visibility into every payment as it moves through the system. This gives you precise control over cash flow.
What innovations have you noticed lately in contactless payments?
Ciphers: For B2B payments, I would define contactless as no manual work. Cloud-based software enables accounts payable departments to automate work that they previously had to do manually. This includes the processing of paper checks as well as the work for electronic payments, as they were done through banks in the past.
For example, if you want to make ACH payments, you have to pick up the phone or send emails, collect the suppliers’ banking details, and likely enter all of this into a system manually. When paying by card, you need to find out who is accepting a card payment by phone or email. You may then need to call the supplier with the card number, which they then enter into a terminal. A surprising amount of manual work has to be done in order for funds to flow electronically through the banking system.
The cloud enables payment automation providers to turn this disjointed process into a single automated workflow with all of its manual touchpoints. The cloud also makes implementation very quick and easy, allowing a company to automate payments in a matter of weeks.
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How has Covid-19 affected mobile payments?
Ciphers: With a cloud-based solution, accounts payable professionals can make payments anytime, anywhere. Up to Covid-19, this type of mobile function was a “nice to have”, but not a must for business payments.
In my financial career, I have never seen an AP team completely isolated. The cell phone wasn’t an issue for anyone in the office. The only exception is the construction industry, where many of the people who approve payments are on-site, making mobile functionality a real selling point for a payment solution. With the AP teams out of the office, every industry is looking for payment solutions that allow them to work remotely as much as possible.
What do you see as the greatest future trend for mobile payment?
Ciphers: B2B payments are roughly ten times as high as consumer payments, but the adoption of cloud-based solutions is still in the single digits. Given the size of the market, corporate adoption of mobile payments is a big trend in and of itself.
Mobile payments have changed the lives of consumers by making payments so easy and convenient that you hardly need to think about it. It has had a huge impact on our lives, really accelerating trade and expanding our options. If you keep in mind that this kind of smooth mobile payments is rampant in the B2B world, which will be inevitable, I think it will fuel all kinds of innovation and change.
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