B2B Payments: A 2022 Guide to Business Payments

May 25, 2022

It’s no secret that the B2B payments space has fallen behind other areas regarding payment innovation. While consumer and peer-to-peer payments have evolved rapidly, B2B payments have lagged way behind. And for the most part, in stark contrast to what consumers and businesses expect—they want fast, frictionless, and seamless payments.

The business payment industry is constantly pushing the boundaries of what’s possible for merchants and their clients, from new technologies to rising fraud. With this in mind, we’ve updated our business payment guide to walk you through all you need to know about the B2B payment landscape for 2022 and beyond.

Across every industry, all businesses are zeroing in on payments to deliver that much-needed boost for their bottom line.

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The future of B2B payments lies in adapting and changing quickly to new information. Payment methods are no longer static. New features, new technology, and new ways to pay are here to stay. For this reason, getting ahead of trends in the payment space before they become expected standards in your industry is vital.

There’s no doubt that B2B payments are in digitization mode. The innovation we have seen in business-to-consumer (B2C) and peer-to-peer(P2P) have fast made their way into the B2B space. A business isn’t simply a business anymore—it is made up of people. And each and every one of those people is a consumer. As our professional lives continue to blur outside the lines of a Monday to Friday 9 to 5 world, our personal experiences will continue to weave into professional expectations.

How companies pay and get paid has become big business. And it is not stopping there. 

B2B Payments: A Market Outlook

How businesses pay and get paid has become big business. In fact, by 2030, the B2B payments market will sit at US$ 70 Bn.

Much of this growth can be primarily traced back to the increased import and export of goods and services worldwide. Over the last few years, the rapid expansion of trade around the globe has seen a jump in cross-border business transactions and an overall need to move money better and faster. 

For example, we see automation technology in the B2B space creating some very lucrative growth opportunities for the market. As a result, paper checks are out, and more advanced digital B2B payment solutions are in.

The rise of digital payments 

The dramatic upsurge of contactless and digital payments has been well documented.  Be it Canadians or our global counterparts, digital payments have become the only way to pay.

B2B Payment Methods 

While digital technology has increased the importance of electronic payment methods, they are not yet fully adopted throughout North America. Businesses must do away with paper and go digital; a faster flow of payments delivers a win-win. Below is the list of the most significant changes we see in payment methods and how they impact your business.

Traditional payments:

Cash – Cash is no longer king; banknotes and coins have decreased in volume by 44% since 2015. Digital payments continue to win over consumers, and cash is beginning to see its way out the door.  

Cheques – Falling fast out of flavour. One of the oldest payment methods in the modern era was down 28% from 2020.

Wire Transfers – Holding on tightly. In the U.S., these wire payments systems are still standing. Why? They offer same-day funding and are perceived to be safer ways to send and receive large amounts of money. This is something businesses seem to like. Will this be overturned as real-time payments take center stage in the coming months? 

Digital payments:

Credit Cards – While still a widely used payment source, credit cards are not as sought after as they used to be. In 2021 we saw a year over year decline of 11% in credit card usage. As businesses become more financially savvy, these will continue to bypass other methods due to their high processing fees.

Interac e-Transfer for Business – Interac e-Transfer saw a record year with more than 763 million Interac e-Transfer transactions sent. Already well recognized in Canada, e-Transfers offer a simple, convenient, and secure way to send and receive near real-time payments at scale directly from one bank account to another.  With the real-time rails set to launch in 2023, expect e-transfers to continue to make massive headway this year. 

Electronic Bank Transfers in Canada (EFT) /Automated Clearing House (ACH) in the US – Often referred to as account-to-account (A2A)payments, this payment method brings lots to talk about  (more on this below). When we talk about a payment method disruptor, this is what we are talking about. Canada saw 2.9 billion EFT transactions worth $5.1 trillion in 2020. Meanwhile, in the U.S., these payments represent the fastest-growing sector of debit payments, sitting at 4% of all eCommerce transactions in 2020.

Digital Wallet – Is B2B there yet?  Undoubtedly, e-wallets that securely store payment information for various payment methods have quickly become a consumer favourite. While it may be too early to say the B2B world is ready to leverage this technology, there is a strong indication that this could be the next step in B2B payments.  

B2B payment trends

Watch this space. Let’s face it; if you are running a business, there is no shortage of articles, blogs, and case studies of payment trends to watch for. The world has begun shifting, next-generation payment methods are on the docket, and B2B payments are put into fast digitization mode. With payment innovation and growth expected to continue, businesses will be jumping on the four following payment trend bandwagons.

Account-to-Account (A2A) payments

As mentioned above, merchants and consumers alike embrace A2A Payments. As consumers and businesses bypass credit card fees and their limits, A2A payments are on the rise. They move faster with A2A payments, are more adaptable, and don’t expire. As the demand for contactless, frictionless, and speedier payments continues, we expect the payment industry to evolve and innovate to meet expectations.

B2B meets buy now pay later (BNPL)

Of all the trends that popped up, we can’t think of any that has affected the world of payments more than buy now pay later (BNPL). Known to have generated $100 billion in 2021, the case was recently made for BNPL to get into the B2B space. 

Real-Time Payments (RTP)

Real-time payments (RTP) is an always available payment system that delivers funds in a matter of seconds. No matter the time of day, day of the week, send a payment one minute, and settlement happens instantly. These payments are skyrocketing worldwide, and with Canada’s real-time payments system, the Real-Time Rail (RTR), expected to launch this year, there is no going back to waiting for payments. This game-changer payment trend for small and medium-sized businesses will give a massive boost and help with the cash flow difficulties many companies were challenged by in 2021. 

Embedded Payments

Embedded payments refer to payment processing functionality included within a software solution. This solution allows merchants to accept payments within their software rather than using a separate software product. With a staggering growth trajectory, the total addressable market for embedded finance will top $7 trillion by 2030. Embedded payments help companies optimize the payment process and reach new markets with significantly lower costs. We delve deeper into embedded payments below. 

Embedded B2B payments

Embedded payments allow the software provider to fully own the payment processing technology and take advantage of the benefits of providing an all-in-one solution. 

In other words, they enable any company to seamlessly integrate the entire payment journey into their end-user experiences. Merchants use embedded payments to transform a strictly functional payment process into a personalized, intuitive experience.

Integrating a simple API into the check-out process, embedded payments offer a convenient, frictionless experience that customers have come to expect. 

 

embedded b2b payments

The 6 benefits to businesses

Across industries, companies need both money and customers to survive. Consumers and businesses want a one-stop shop. They need a fluid and simple payment experience, or they will head somewhere else. Electronic payments have become an excellent opportunity for businesses to enhance the customer journey, reaping numerous benefits. 

1. Deliver a better experience

Customers expect a seamless and frictionless payment process. With digital payments, customers can use a self-service platform and pay invoices from anywhere at any time. Providing the ability to pay directly from an email or invoice makes it fast and simple. 

2. Lower risk with more robust data security

Mitigate potential breach threats. Digital B2B transactions are much more secure. Forget handling sensitive payment information. Tokenization is the security solution platforms need. 

3. Payment method flexibility means faster payments 

Offering various modern payment methods often leads to getting paid faster, improving cash flow, and allowing companies to expand quicker.

4. Traceability

Determining where a payment came from or where one is going becomes easier when things go digital. Avoid ambiguity and confusion while tracking payments and know where the money is at all times.

5. Increase Revenue Potential

Monetizing payments can generate new revenue streams. By tapping into the payment charged by merchants, businesses can add a small but significant share of stable revenue to their books. Additionally, it allows companies to charge processing fees and enter into potential revenue-sharing agreements. 

6. Reduce processing costs

Businesses struggle to process payments efficiently; manual payment methods create a labour-intensive process with little to no visibility into a transaction’s status. Generally speaking, managing and maintaining payment processing is no small feat, and it is costly to do so. Not to mention, many payment methods are loaded with fees and soft costs, including paper checks and credit card payments.

Did you know:  When you consider the labour, supplies, and amount of checks processed, the true cost of a cheque will sit somewhere between $4 and $20, according to the Bank of America.

hidden costs of a cheque

Download the complete guide to learn who makes the grade when it comes to the top B2B payment processors and how to implement a payment strategy into your business today!

To schedule a demo or speak to a payment specialist, click here.

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