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The Consumer Experience Meets Business Payments Requirements

The tug-of-war between institutional inertia and innovation is coming to a head in business-to-business (B2B) payments. 

That’s because, as generational and behavioral tides turn, expectations and experiences around consumer payments are impacting B2B relationships. 

Firms can gain a competitive edge by offering the best services, particularly given that the ease of payment has never had a greater impact on the overall B2B relationship. 

With paper checks still tied to 40% of commercial transactions, and other legacy and manual B2B payment processes still prevalent, there is an opportunity for innovation using modern payment methods — digital wallets, real-time payments, artificial intelligence (AI) solutions, and mobile payments. 

But while legacy methods struggle to keep pace with the speed and security of the latest payment innovations, it remains to be seen which innovations will have the greatest impact on B2B payments tomorrow. 

After all, challenges like standardization, security concerns, and regulatory compliance must be addressed for these innovations to reach their full potential in B2B payments.

Read more: Digital Wallets, Pay by Bank and Push to Card Can Transform Cross-Border Payments

B2B Payments at the Cusp of Transformation

Real-time payments have become a hallmark of consumer and peer-to-peer transactions. This demand for immediacy is moving into the B2B landscape, where companies are seeking faster and more efficient payment processes. 

“There’s a lot of change going on in the industry,” Kelli Svymbersky, vice president of payment at CCC, told PYMNTS in an earlier discussion. “We are all expecting that instant-payment experience that we have in our personal lives across business transactions … the payments experience is [becoming] a part of the organization’s brand.”

The integration of real-time payment systems can also significantly enhance cash flow management for businesses, fostering smoother operations.

“What’s often lost with instant payments — and this is where the education and awareness come in — is that there are key features that go well beyond the speed of the payment,” Irfan Ahmad, managing director and head of U.S. payments GTS at Bank of America, told PYMNTS, adding that those features allow businesses to differentiate themselves, with round-the-clock availability and transparency across a variety of use cases in industries ranging from trucking and hospitality to gaming and real estate.

At the same time, the scalability and standardization of real-time payments across diverse B2B industries remain hurdles that need to be addressed for widespread adoption.

Read moreThe Trickledown Consumerization of B2B Payments Helps Firms Win Business

Businesses demand flexibility, particularly across payments. While legacy methods have been the backbone of B2B payments for years, businesses are exploring alternatives that offer greater speed, security and efficiency. 

“Payments is experiencing kind of a second renaissance, if you will, with the rise of alternative payment options such as buy now, pay later, wallets, and bank payments. … Businesses are spending a huge amount of time and money on UX [user experience] improvement, figuring out how they can improve the customer experience,” Andrew Gleiser, CRO at FinTech platform Aeropay, told PYMNTS. 

One of the trends gaining momentum in the B2B payment space is the adoption of digital wallets and contactless payment methods. The speed and convenience offered by digital wallets align with the efficiency requirements of businesses, reducing the friction associated with B2B payments.

Yet, the challenge lies in achieving widespread acceptance and standardization across industries, as businesses may face resistance or technological barriers in adopting digital wallet B2B payments.

As previously reported, PYMNTS Intelligence has found that 6 in 10 firms use legacy methods to pay for commercial goods and services; while separate PYMNTS Intelligence found that 36% of small to medium-sized businesses (SMBs) cite both cost and complexity as barriers to automating their accounts payable and accounts receivables.

See alsoBuy, Build or Partner? The Dilemma in B2B Payment Modernization

Achieving Stickiness

“On the technology side, if you’re in a place now where your in-house system looks like it did 20 or 30 years ago, this is a chance to make a huge leap forward,” Ben Lamm, chief operating officer at Capital One Trade Credit, told PYMNTS in August. 

But for payments innovations to have an impact in B2B, they will need to position themselves as worth the effort. Fortunately, going digital offers no shortage of benefits, particularly in today’s macro climate. 

“The market changes over the past few years have really accelerated the adoption of digitized B2B payments, which in turn has accelerated the innovation in the industry,” Chris Lolli, vice president and general manager of B2B product, partner and client management, at American Express, told PYMNTS.

The newest innovation in B2B payments is the application of AI and machine learning (ML). 

Automation and integration of payment systems, handling unstructured data from communication channels, language translation for cross-border payments and personalized recommendations for dispute resolution are some of the areas where AI can provide accelerated solutions, Ahsan Shah, senior vice president of analytics and AI at Billtrust, told PYMNTS on Feb. 8.

 “When people ask me where generative AI can be used, my answer is, Where can it not be used? This is a transformational opportunity for B2B,” Shah said. 

As Enigma Technologies CEO Hicham Oudghiri told PYMNTS in November, “Companies are being pushed to innovate. … They have the technologies they need to innovate, and they have a lot more market adoption when they do innovate.”