Traditionally, the B2B payments space has lacked innovation, with digital solutions primarily focused on serving the B2C market. Recent research from Ernst and Young LLP (EY) and Payments Canada supports this, outlining that Canadian businesses are currently spending up to $5 billion on processing payments. This overspend is mainly due to issues prevalent in the payments industry such as a lack of transparency, traceability, and available data on payments processing.
Positive changes are happening in Canada’s B2B payments landscape, with FinTechs now challenging the status quo and modernizing payments by introducing new technologies. This includes open APIs that eliminate some of the payments industry’s key pain points. However, a recent survey by Payments Canada outlines that over 80% of Canadian small businesses still want more payment options to be available and one of the most important factors for these businesses is safety and security.
With this in mind, what are the key benefits of digitized payments for B2B businesses today?
New automated solutions, such as account-to-account transactions which enable B2B customers to make online payments without needing to handle a credit card, can cost 80% - 90% less than traditional credit card payments which typically place a heavy burden on a business's profit margins. Moreover, with digital payments businesses can experience significant cost savings compared to traditional methods such as cheques, which incur high processing and material costs not to mention postal delays and the numerous security implications.
Recent research on global SMBs found that 59% identified security as a critical differentiator when selecting a Payment Service Provider. Digital bank account payments address security concerns by removing the vulnerability associated with providing credit card information and all transactions are completed with clear traceability.
Innovation in the payments industry has enabled businesses to gain insight into the end-to-end transaction lifecycle and make payments in real-time. This digitization of payments opens the doors for businesses to make faster payments and access much richer and more comprehensive data analytics. This can assist businesses by improving cash flow insights and predictability by identifying areas that drain resources and allowing them to reallocate where needed and streamline operations.
Finally, payment solutions are no longer being designed with one party in mind, and instead, businesses are able to reap the rewards of increased efficiency and transparency whilst also being able to empower customers with quick and frictionless payment flows.
Overall, the B2B payments industry is only going to continue to evolve as we enter 2020 and at VoPay we hope to see more B2B businesses embracing the many benefits that these innovative solutions are finally affording to them.