Consumers’ expectations about payments are changing — so much so that it’s no longer the transaction they’re focused on. Instead, they are focused on the experiences tied to each and every time they send or receive money.
Ideally, that money movement should be barely noticeable beyond the initial authorization. We’re all familiar with ride-hailing and the “invisible” payment that occurs the moment we step out of the car.
Derek White, CEO of Galileo, told PYMNTS’ Karen Webster in the latest Summer Series edition that embedded finance can lead to a sea change not just in consumers’ everyday financial lives, but in B2B, too — upending the trillions of dollars that move between buyers and suppliers.
Change, of course, begins at the individual level. Consumer comfort with tapping on glass, spurred by the pandemic, has been displacing the age-old ritual of signing a piece of paper or exchanging physical tokens (such as dollars) in exchange for goods.
With mobile devices in hand — and with tap and pay, digital wallets and always-on commerce at the ready — consumers are discovering new avenues of browsing and transacting through a number of channels, as far-flung as social media and other digital-first and digital-only environments.
See also: Embedded Finance Puts Banks, FinTechs on Equal Footing
They’re able to transact and get things done in the here and now, opening accounts with a few clicks or moving money on demand. There’s a generational shift in the mix too, as tech-savvy Gen Xers and millennials share apps and experiences with their children and discuss how money moves from their phones … to the world at large (and really, when’s the last time you saw an 18 year old write a check?).
Ecosystems Take Shape
“This is where the concept of the ecosystem takes shape, and this is where the traffic and the interactions are happening,” White said — at home, on websites and in the blending of digital and physical channels. Social media is about far more than just reading posts on a site.
Thus, a blog can be more than the written word, and can actually serve as a channel for the movement of goods mentioned within that blog. That’s an entirely new monetization model for an entrepreneur/blogger. Additionally, as payments and movement of goods are intertwined with the blog (in this example), the network effect can have a positive impact for retailers and manufacturers connected to the online traffic.
That online evolution of seamless, multi-layered interaction can make it better, and easier, for businesses to work with and pay one another.
Galileo, for its part, helps founders and builders create new businesses that are part of and help shape the new payments world. The company is being increasingly pulled into the B2B space, he said, and there has been increasing momentum in sending virtual cards rather than physical cards and checks.
Automation, of course, plays a huge role throughout it all, and banks need automation (through their own providers) to facilitate the money movement and extend credit, payments and insurance with speed and security. There’s a lot of technology behind that tapping of the glass that helps a farmer realize cash flow more quickly.
Read more: B2B Payments Gaining Attention Alongside Quest for Speed, Liquidity, Simplicity
“The B2B space is still ripe for the digital adoption of virtual payments,” he said. Checks are still more than 50% of B2B payments — and it should be noted that the B2B transaction values are significantly higher than B2C.
With the said, that there are four key areas of value when it comes to money movement. The first area hinges on the speed of the payment itself. Payments are being increasingly linked and embedded into merchant/consumer activities. The second area is the increase of the money supply through credit and lending.
“That acceleration of credit,” he told Webster, “instead of being separated from the actual experience, is deeply linked into it.”
The third value aspect is tied to the issuance of insurance (where a truck driver on a long-haul trip who blows a tire can get a replacement authorized and paid for with a few taps on their phone). Farmers who’d been used to driving an hour to the nearest bank with a check in hand can see a boon in embracing digital payments instead.
Related: Bushel Launches Solution to Move $200B of Farmer Payments Digital
And finally, as all of these factors converge, there’s the creation of a “brand” within B2B, where companies build customer satisfaction and loyalty as use cases and experiences intertwine.
“Now,” White said, “the consumers and businesses trust the glass as much as they do the physical dollar bill, and as much as they trusted the physical paper check.”
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