Experts Say Supply Chain Challenges Spur New Digital Payments Innovations

First the bad news: It will take years for supply chains to return to normal.

But the good news: A panel of experts in transportation, logistics and finance told PYMNTS in an interview that this challenge is also an invitation for continued innovation in any technology that can help reduce frictions, expedite global trade or improve cash flow.

Panelists included TruckPay President and CEO Barry Honig, YayPay CEO Anthony Venus and Fiserv Senior Vice President and Head of Global Enterprise Solutions David Ades.

Ades noted that in terms of high-level trends, “consumer behavior is ‘bleeding’ into business-to-business behavior.” Contactless payments are growing, and people are eschewing using paper checks. It’s natural to assume that commercial payments would follow suit.

For B2B automation trends, noted the panelists, innovation comes in waves. Outsourcing of payroll, for example, can be traced back decades. Automation of back-office functions, once the purview of larger firms, more recently has been filtering down to smaller companies. YayPay’s Venus said that as larger buyers are streamlining and modernizing operations and moving to platforms, smaller suppliers will sign up.

“We’re on a train that won’t stop,” said Venus of the pivot toward digital payments.

The Problems on the Ground

To get a sense of the problems on the ground, so to speak, TruckPay’s Honig stated the biggest issue that confronts all manner of firms, no matter their place in the supply chain, is labor. That’s especially true for trucking, a critical component for the flow of goods across states and across borders.

The trends toward a labor shortage were in place well before the pandemic, and now they have been exacerbated. Honig stated that the shortage could be as broad as 60,000 to 100,000 workers.

Several solutions are being bandied about in various quarters, Honig noted, including the idea that the age for commercial drivers’ licenses be lowered to 18 years of age, down from 21, to expand the labor pool. The urgency is there as the current infrastructure legislation on the Hill is likely to increase the demand for drivers.

Another way to help streamline pressures in the logistics sector is to offer more payments optionality, including cryptocurrencies, said Honig.

In an announcement at the beginning of this year, the company said that cryptocurrencies, including bitcoin, will be available as payment options on the TruckPay Fleet Management and MyTruckScales platforms.

Read more: TruckPay Will Accept Crypto For Logistics Payments

The company’s motivation for doing this was twofold, said Honig: to enable faster cross-border payments so that drivers and other workers could be paid quickly and easily no matter the country, and to bring speedy payments to underbanked individuals.

Fiserv’s Ades said that within cryptos and digital assets, stablecoins are likely to get relatively stronger traction in payments, given the fact that they are pegged to fiat. Beyond the promise and eventual deployment of cryptocurrencies, for now at least, “the pressure point is getting more people into the field,” Honig told the panel.

Against that backdrop, online marketplaces such as TruckPay’s can bring subcontractors, owner-operators and others to match up supply and demand.

And with the platform models in general, as YayPay’s Venus said, digital payments are rapidly being embedded into the interactions between those supply-demand matchups. He noted that his own firm has seen a 300% jump in digital payments on its own platform in the wake of the pandemic.

That triple-digit jump has come on the heels of the general shift to work-from-home environments, and the general trend of embracing automation to replace manual tasks — everything from processing checks to collecting bank details.

“With the credit crunch that happened at one point, especially during the pandemic, we’ve seen a lot more demand for credit assessment,” said Venus. “That’s led more people onto our platform.”

Fears over inflation have been leading people to find value in getting money into the bank faster. With a nod to the pressures of the supply chain, Venus said that $40 billion in accounts receivable (AR) has flowed through its platform through the past 12 months.

As supply chains are global in scope, and the pandemic has upended firms’ operations, Fiserv’s Ades said the digitization of B2B payments has become ever more pronounced.

“The importance of cross-border payments — the ease for companies to pay thousands and thousands of suppliers across the world in a more effective manner … it’s at the top of the list for anybody in a B2B space right now.”

Most immediate is the desire to cut down on paper-based and manual processes. Honig noted that the trucking vertical has been heavily paper-based, but in recent years there has been a push to digitize tickets and trucking manifests, and even to embed payments within tickets.

With particular emphasis on government-contractor relationships, he said, “if you want to play in this multi-billion-dollar space,” the incentive is for these companies to upgrade and embrace safer, speedier ways of interacting with supply chains.

In this way, we’ll see the continued consumerization of logistics and transportation — an Uber-like experience where, say, one can track (via app) where a driver is, when they’ve picked up cargo, and what documents have been signed electronically (and when).

Said Honig: “You’re going to see a significant amount of integration, where you have platforms like ours talking to various [enterprise resource planning (ERP)] systems, talking to inventory systems, talking to warehouse systems.”

That integration and interoperability is a hallmark of digital payments, said Venus, who stated that his platform takes data from enterprises’ ERP systems and matches it against large swaths of other data in efforts to determine who is creditworthy and most likely to pay back invoice financing.

Looking ahead, said Venus, we’re headed down the (proverbial and literal) road toward seamless, frictionless, automated commerce, where one can click on and finance an invoice with analytics predicting when an enterprise’s cash flow is going to come in within a fraction of accuracy.

“There will be great transparency and great visibility throughout the system,” he predicted.