The payments industry has long been in need of disruption. And change has finally come—driven, at least in part, by the coronavirus pandemic.
On the consumer side, in its State of Retail Payments, the NRF reports 67% of retailers now accept some form of no-touch payment. That includes 58% that accept contactless cards, up from 40% last year, and 56% that take digital wallet payments on mobile phones, up from 44%. This year, no-touch payments increased 69% among the retailers surveyed.
There’s movement, too, on the B2B front—also fueled by the Covid-19 crisis, where businesses historically have been slow to adapt to automated payments.
To gain insight into the trend, and to find out how it’s impacting businesses, I checked in with Josh Cyphers, President of Nvoicepay, a financial technology company specializing in intelligent payment automation.
What are some of the big trends driving B2B payments?
Josh Cyphers: Paper checks still reign supreme in B2B payments, but Covid-19 has created a compelling event that is really pushing companies toward fully automating payments. This is a significant shift. Over the last 10 to 15 years, check use has been ticking down ever so slowly. According to the 2019 AFP Electronic Payments Survey Report, in 2019 organizations made 42% of their supplier payments by check, down from 81% in 2004.
Now that accounts payable departments are working remotely, companies are trying to minimize the amount of manual work that requires trips to the office or to employee’s homes to get them to sign checks. Suppliers would rather be paid electronically because they get the money faster, and they 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 checks.
The other thing that’s happening is an extreme focus on managing cash. Given the economic environment we’re in, many companies are looking for ways to conserve cash. They’re looking at the timing of payments, extending payment terms to suppliers, or delaying payments. With an automated solution, all the payment approvals and workflow are online, and you have visibility into every payment as it moves through the system—giving you precision control over cash flow.
What are some innovations you’ve noticed in contactless payments lately?
Cyphers: In B2B payments, I would define contactless as not having to do manual work. Cloud-based software is enabling accounts payable departments to automate work they’ve previously had to do manually. That includes the handling of paper checks, as well as the work that goes into electronic payments as they’ve historically been done through banks.
For example, if you want to make ACH payments, you have to pick up the phone or send emails, collect suppliers’ banking information, and probably manually key all that into a system. For card payments, you have to phone or email to find out who will take a card payment, and then you may have to call the supplier with the card number, which they then enter into a terminal. There’s a surprising amount of manual work that has to be done to get the funds to move electronically through the banking system.
The cloud enables payment automation providers to transform that disjointed process into a single automated workflow with all its manual touchpoints. The cloud also makes implementation very fast and easy, so automating payments is something that an organization can now accomplish in a matter of weeks.
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How has Covid-19 impacted mobile payments?
Cyphers: Having a cloud-based solution allows accounts payable professionals to make payments anytime, anywhere. But up until Covid-19, that kind of mobile capability was a “nice to have,” but not a must-have for business payments.
In my finance career, I’ve never seen an AP team that was completely remote. With everyone in the office, mobile just wasn’t a consideration. The one exception is the construction industry where many of the people who approve payments are out in the field, making mobile capabilities a real selling point for a payment solution. Now that AP teams have been 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 biggest future trend for mobile payments?
Cyphers: B2B payments are about 10 times as big as consumer payments, yet adoption of cloud-based solutions is still in the single digits. Given the size of the market, the adoption of mobile payments by businesses is a big trend in and of itself.
Mobile payments have changed consumer life by making payments so easy and convenient that you hardly have to think about it. That has had a significant impact on how we live our lives and has really sped up commerce and increased our options. When you think about that same kind of frictionless, mobile payment experience becoming widespread in the B2B world, which it inevitably will, I believe it will fuel all kinds of innovation and change.
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