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3 Ways Consumer FinTech is Driving B2B Payments Innovation

January 10, 2018
person making online purchase with credit card

Once upon a time, most consumers used cash and paper checks to pay for goods and services. They stood in long lines to pay bills and transfer funds from their bank account. Since the evolution of technology and payments, shoppers have seen the light. Many are making payments with the click of a button – all thanks to tech. 

Many businesses are ready to leave paper checks behind. They’re done with the days of late fees and manual processes for payments. Companies are ready to follow the new leaders of the payment world:  consumers. They’re shaping the purchasing process and markets with just the click of a button.

Using ePayments for A Faster, Simpler Purchasing Process

Many consumers are done with the days of paying for groceries with cash and checks. They’re tired of entering the 16-digit credit card number, or the fear of someone knowing their pin. They’re exploring secure and simple payment methods that cut the purchasing process time . As the eCommerce world grows, consumers are trusting electronic payments that they can manage from their mobile devices.

Buyers are well-adjusted in the ePayments world. They’re leveraging EFT (Electronic Funds Transfer) payments with direct deposit and auto draft for subscription services. These same shoppers are paying their friends digitally with P2P (Peer to Peer) mobile apps like Venmo and PayPal to split payments. For consumers, ePayments bundle convenience, simplicity, and security in one service that makes paying a lot simpler than counting change.

But the biggest ePayment trend is on the rise. Consumers are opening their wallet with their smartphones to pay electronically. With eWallets, shoppers add their credit card information to their smartphone and pay with the click of a button at accepted retailers and restaurants. Time is cut substantially by skipping the process of entering a pin and following the instructions on the keypad.

A recent World Pay report provided insight into electronic payments for business based on consumer payment trends. According to the WorldPay survey, eWallets are growing more popular as the payment method becomes widely accepted. By 2021, 46% of global buyers will transition from credit cards and cash to eWallet in the eCommerce world. The report agrees that consumers want a faster buying streamlined process – even when they’re shopping online.  

How can the B2B world trust tech for payments? It might be hard for businesses to say goodbye to their paper trail of checks and receipts, but the cost savings will ease the pain. Trading checks in for electronic payments for business can save lots of time instead of the older payment methods, like paper checks, which carry the high cost of security and processing.

Of the many options for electronic payments for business, ACH (Automated Clearing House) reigns as one of the top methods of B2B payments. Trading in checks for ACH comes at a big advantage for businesses. ACH handles the payment transfer directly to the account instead of worrying about the check being lost in the mail. There’s an extra layer of security that payments are sent to the correct account with account verification processes. There are also hours given back to the finance department’s work week instead of finding the correct payment method or account information.

In 2017, the National Automated Clearinghouse Association, the organization responsible for maintaining the Automated Clearing House (ACH) network, took steps to bring same-day ACH fund availability to the mainstream. While payers can’t “float” payments as they wait for a check to clear, billers can rest easy knowing that their payment will arrive quickly.

With paper checks, instant is far from the norm. Paper checks take days to process and up to, or over, a week if you include postal travel. Digital payments are unencumbered by the postal service and don’t have to be signed by the controller or CFO with a pen.

Businesses need ePayments to stay up to speed with consumers and vendors. As consumers make decisions digitally, businesses do not have weeks to waste waiting for payments to process. With ePayments, businesses have real-time reports to support all vendor, processing time, and payment decisions. Ultimately, they increase the financial department’s visibility into finances and reporting with real-time data. Immediate access to financial data and metrics paints a real-time picture of B2B purchases and payments to improve efficient spending.

Making Security a #1 Priority in the Purchasing Process

Consumers are well aware of the countless breaches, fraud, and thieves that are on the prowl for personal and financial information. They are taking the extra step to ensure that each payment method used is ‘safe and secure.

This raises the question, what security measures are consumers trusting that businesses can buy into? As consumers take advantage of eWallets, they are trusting encryption and tokenization to protect them from data breaches and fraud. Tokenization protects consumers with a token – a random string of numbers generated to hide the secure information.

Consumers use this when paying with eWallets or when storing cards on file for subscription services. Banks secure this information from fraud and data thieves by providing the random number instead of the consumer’s account information.

For many finance departments, account information is safe in storage internally. Finance departments write the check, mail it, make notes, and stuff the copy in a filing cabinet where it is ‘safe and sound.’’ Even though businesses and consumers are both at risk for data breaching and payment fraud, according to the Bureau of the Fiscal Service, “you are 125 times more likely to have a problem with a paper check than an electronic payment.”

Companies that keep card information on file are running the risk of being hacked. Instead of keeping unprotected card information on file for payments, tokenization protects electronic payments for business by replacing card details with randomly generated numbers. Using this security measure ensures that payment information is secure and are followed by a set of standards.

The PCI Security Standards Council has compliance standards for all tokenization systems including strong security measures for card data, a secure, trusted internal network, and alerts for any risks. Tokenization also comes with a low cost and end-to-end security – big bonuses as businesses place big bets on electronic payments in the B2B World.

Leaning on Data and Tech to Solve Problems

Every purchasing decision comes with research. Both businesses and consumers evaluate the product, supplier, cost, and other factors to make the right choice. For every consumer, every product fills a need or desire.
The big way every business can win customers over is using real-time data and reporting to best serve customers in the purchasing experience. Data from payment methods, product purchasing, and frequency all help businesses serve their consumers better.

One way businesses are studying customer problems and purchases is by using Square POS. The point of sale system brings multiple features together to shape the purchasing experience for both customers and businesses. The register processes customer payments in real time while managing itemization and inventory for businesses to have full visibility into their sales.

There are plenty of other perks outside of the point of sale process to give businesses insight into the entire business funnel. Other features include email marketing and customer profiles. Square also keeps businesses in the know about inventory and sales with live inventory tracking, project projections, and purchase analytics.

Services like Square make data collection simple for businesses to gain customer insight needed to make informed product decisions for efficient use of vendors, faster access to funds, and full visibility into the ROI on goods. Businesses also gain insight from customers to make the right decisions going forward.

The same is true for the B2B market, especially in the procure to pay process. Businesses are learning how to survive the B2B world with data and automation to help make the right buying decisions. Businesses must choose vendors and services to help them maximize growth and minimize product costs. Using data and research to make the right vendor decision is essential to maximum growth and minimum cost.

With accounts payable automation, businesses retrieve the data needed to make informed purchasing decisions from vendors. In Ardent Partners’ ePayables 2016 report, reducing processing costs was the number one focus of AP leaders. Fortunately for businesses, this is also one of the first impacts of upgrading AP systems to include ePayments.

Incorporating the AvidXchange™ suite of AP and Payment Automation tools not only boosts efficiency but gives businesses the data and insight needed to make informed vendor and purchase requisition decisions. More insight into B2B problems leads to more informed purchasing decisions and cost savings.

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