The last six years have seen significant advances in FinTech and Cloud technologies, demonstrating just how radically changing the B2B payments landscape is. Taking lessons learned from consumer-facing services, banks and FinTech providers are on the path of taking fresh approach to market that promises to extend the B2B Payments (r)evolution.So what’s next?
Fast, Faster & even faster!
In the short term, payments will continue to be faster. Speed is key to the success of the future of payments; increased efficiency is vital to helping payments complete more quickly. Where businesses are forced to wait between three and five days to process a cheque-based payment, future B2B payments promise to perform the same task, electronically, within a matter of hours.
As FinTech platforms prove their worth, and technology improves, we can expect each transaction to complete even more quickly in future. Where the platforms are properly integrated between sender and receiver, payments will take place in real-time – even across international borders. We can thank P2P payment platforms like MangoPay for setting the standard for this!
B2B payments will be on sale
Efficiency of payments doesn’t only benefit B2B payment clients; the FinTech providers behind each platform also stand to gain too. By continually refining the processes that facilitate payments, it becomes possible to lower the cost of processing every transaction – and FinTech platform providers can pass those savings on to their customers. As volume increases behind each provider, they are able to improve and pass on even better whole sale rates.
It then becomes a case of increasing transaction volume to provide the necessary profits. By keeping margins low and transaction volume high, FinTech organisations will continue to generate healthy revenue.
B2B payments will become simpler
The consumer ‘digital wallet’ approach is unsuited to the B2B payments sector, so FinTech providers have been looking to create platforms that facilitate transfer of funds with a consumer UI in mind. Moving away from costly ISO connections, most implement secure web Cloud-based platforms that provide web service interfaces, allowing businesses to connect their own applications directly. What’s more, many of these interfaces consolidate and automate payment processes and eliminate the requirement for multiple systems, with multiple log-ins – even when exchange of currency is involved.
The web-based platform approach avoids the need for complex data reshaping before payments can be made and received, reducing the burden on local infrastructure. As circumstances change, platform users can avoid costly redevelopment costs because the more complex details of the payment handling and data transfer process are managed by the platform, not the clients’ applications.
These platforms will continue to grow in popularity and importance for businesses keen to improve cashflow and streamlined payment processing. It it a possibility in some instances that these platforms can be a source of new revenue streams. Whilst others are open sourcing their technology so developments can experiment, improve and iterate current features.
Collaboration will be crucial to success
The high speed, low cost FinTech model is incredibly attractive to organisations involved in the flow of funds and established banks who have realised they need to act now, or risk losing market share.
This realisation has led to an increase of collaboration between established banks and FinTech organisations, a symbiotic relationship that helps both parties profit and to deliver a better service to their customers. This is when FinTech will have his biggest impact. FinTech organisations often share their knowledge and technology in return for access to the banks’ experience and customers, or investment in their organisations.
Working together, these partnerships will also be able to negotiate the various complexities of payment handling – particularly in terms of international B2B payments. Again, the experience of established banks will help to avoid common pitfalls, whilst the technological expertise of FinTech organisations will help to standardise and automate the necessary steps, simplifying operations and continue to contribute to increased customer satisfaction.
Faster, cheaper, more pervasive
Like every other system reliant on technology, the future of B2B payments lies in increased speeds, lower costs and greater uptake in every industry. It is highly likely that this will be dictated by the adoption of blockchain technologies. A traceable global currency complete with an efficient infrastructure will not only result in massive cost reduction for all market participants, it will change the nature of global banking. Cryptocurrency is likely to do for payments what email has done for communication.