It’s the start of a new year, and innovators are making predictions left and right about what 2016 will bring for FinTech and payments. This week, payments company BillingTree made its contribution when Dave Yohe, the firm’s head of corporate marketing, released three predictions that will impact the payments ecosystem this year.
According to Yohe, 2016 will see a new focus on EMVCo compliance and tightened chip-and-PIN security, the disruption of traditional banking by millennials and continued FinTech development, largely fueled by a changing regulatory landscape.
These three prophecies have significant impact for B2C payments, but what about B2B? PYMNTS put Yohe on the spot and asked him to consider how the business-to-business landscape may similarly experience its own trifecta of change.
Card Compliance And Security
Yohe’s first prediction is a shift to the focus on EMVCo compliance and CNP security — two areas that target retailers accepting consumer cards. “Security for card-not-present payments needs to be as tight as possible, as industry opinion predicts fraud moving towards these types of transactions due to the EMV liability shift,” Yohe writes.
But, as he explained, concerns like tokenization, security and fraud are likely to hit the B2B community as well. “You don’t hear about B2B fraud as much as you do in the B2C world, but it certainly is there,” Yohe said.
He pointed to instances like payroll fraud, in which a criminal diverts a payroll transfer potentially worth millions of dollars. Plus, there is the business email scam. Regulations, like EMVCo compliance, all aimed at preventing consumer credit card fraud, largely bring to mind the security of payments in B2B transactions — whether those transactions are initiated with a card or not.
The Millennial Impact
Kids these days. Second on Yohe’s list of 2016 payments predictions is the impact of a new generation in the market. Millennials are shifting the way they do banking, demanding mobile, electronic solutions and faster payment speeds.
But a new generation of consumers also means a new generation of business owners. So, will this population change the way businesses pay each other, too?
Yes, Yohe said, though he acknowledged the change might be slower and less dramatic.
“That’s probably the area that has been slower in the electronic payments world, is the B2B payment,” he said. Still, there is a trend towards financial technology — mobile banking, cloud-based platforms, electronic documentation, faster payments and a digital trail to accompany all of this — that is likely to change the way businesses do their own banking.
“They will demand more services to be able to be done digitally and electronically and not in person,” he explained, “but also to retain the security.” That’s true for consumer banks, and it’s true in the enterprise banking space as well. It’s a disruption that largely comes from a generation of banking customers, be they individuals or small business owners, being confronted with a financial institution’s inability to meet their digital demands and challenging that inability by asking their banks, “Why?”
In the B2B world, this demand for digitization hasn’t caught on as quickly, however. According to Yohe, the bill presentment side of a transaction — sending an invoice, for example — has gone digital. But the payment side remains a manual process. It may be up to millennial entrepreneurs to introduce payment portals to their companies, to demand the ability to gain real-time insight into outstanding bills and payments and to question why they continue to run down to the post office, send a physical check and rely on the “check is in the mail” cash flow management method.
Continued FinTech Innovation
The world of FinTech will continue to innovate. That’s the third prediction by Yohe, and, he admits, it’s a bit of a self-fulfilling prophecy, as BillingTree will roll out new solutions in 2016, including for its B2B payments tool Payrazr.
For consumer payments, Yohe predicted that the role of changing regulation will largely guide how FinTech innovation evolves this year, especially as payment processes continue digitizing.
B2B payments innovation isn’t exempt from being molded by regulation, however, he said. Yohe highlighted Regulation E and the Consumer Financial Protection Bureau’s recent clarification on certain rules pertaining to recurring payments and electronic signatures that could have a significant effect on the B2B payments ecosystem. Continuing developments against payments fraud will also naturally make their mark in B2B payments.
“Regulation is always a driving force” of payments innovation, Yohe said.