It is very easy for many who are new to the fintech space to think that financial technology is an exclusive term for payments technology, and while there is some truth to this, it does not tell the entire story about fintech. However, in June, The Fintech Times is looking to indulge this belief as we look to discuss hot topics surrounding both sending and receiving payments, like buy now pay later (BNPL), early paydays and much more.
When you think of payments it’s very easy to think solely about B2C transactions – with many taking advantage of technology like Apple Pay on their phones, it is possible to forget about the developments that are being made in the industry to improve B2B transactions. With this in mind, we reached out to the industry to find out how businesses are paying other businesses.
API’s revolutionised business payments
Kunal Sawhney, CEO, Kalkine Group, said, “To align itself with customers’ rising expectations and behaviour, the payments industry has evolved at a breakneck speed in the last few years. Today, the payment industry forms the core of banking transformation. Moreover, as the fintech revolution threatened to usurp the banking system, banks have come to recognise the need to work closely with the emerging payment industry. Businesses can now pay other businesses with effortless ease and convenience with the help of technological advancement. API bursting into the scene has revolutionised the payment system as people buy, sell, transfer funds, and access money across the globe instantaneously. Now, what we see is increased collaboration between banks and the fintech entities making real-time money movement a reality. Another contribution of the payment industry is the rendering of the payment-as-a-service to small and medium enterprises. The use of AI and the implementation of machine learning will become the payment industry’s mainstay in days to come.”
Alternatives to Bacs
Ian Wheeler, chief executive and founder, Income Group looks at alternative ways to save businesses money in transaction fees, “Although three out of five professionals use Faster Payments, 85 per cent of UK businesses use Bacs as their main form of business payments. One of the most restrictive elements of Bacs are the deadlines with making payments, and the delay of three working days for it to reach recipients.
“20 per cent of businesses had to make more than 20 payments outside of their normal Bacs pay run at an additional cost – all these additional payments could be made through Faster Payment with no additional fees.”
Rise of virtual cards
Catherine Dahl, CEO at Beanworks by Quadient, said, “These days businesses can use multiple methods, from paper check to virtual credit cards, Interact and direct debit payments. Virtual cards are the more convenient way to send a payment as it requires little to no information from the vendor to process the payment and it’s instant. These methods generally have a cash back feature making them a profitable way to collect payments.”
Payment flexibility needed
Philip Kelvin, co-founder and CEO of Tranch, adds, “B2B payments has, as a subsector, lagged its consumer counterpart in terms of innovation. Innovation is drastically needed, focusing specifically on providing payment flexibility and facilitating large transactions. At the moment, accounts payable is focused in on reducing cost of transactions (e.g. whether to handle them in-house or outsource) or integrating with accounting systems, not on how best to actually pay for items.”