Introduction to B2B Payments

What are B2B payments? 

Business-to-business payments are for transactions between businesses, or corporations. They involve multiple levels of checks, choice of channels and payment formats that make them more complex and process driven. B2B payments tend to involve high-volume, high-value repetitive transactions using processes that can take a significant amount of time. B2C transactions are fast and easy to execute.

What developments have there been in the B2B space? 

The most common ways of making B2B payments include paper cheques (declining, but still a substantial part), cash, electronic transfers through banks and cards.

Digital developments over the last 20 years have significantly changed the way payments are executed. There have been increases in speed of processing, improved transparency and multiple channels have emerged. The results are better Management Information, automation with minimal human intervention, positive cash flows and efficient controls.

New initiatives regulations such as the Open Banking initiative and the second Payment Services Directive have played a significant role in influencing the digitisation of the payments landscape. 

The regulatory framework has: 

• Directed the regulated financial institutions to be more transparent
• Promoted competition by asking all regulated banks to make their consumer clients’ data available to authorised service providers
• Bought immense comptetition to the market from Authorised Payment Fintechs

What industry trends are we seeing? 

• Real-time:
  Real time payments are instant and are available 24/7, 365 days a year. Adoption of a real time payment system first gained impetus after the year 2000 and the trend is continuing to grow across the globe.
• Transparency:
  Industry regulatory bodies and fintechs seeking to disrupt the traditional players through innovation have influenced banks to develop new tools to deliver transparency.
• Mobile payments:
  Most Treasurers or procurement managers want the flexibility of transacting on the go. It keeps businesses agile rather than requiring them to be at the fixed terminals of their workplace.
• Expanding options:
  From online card payments and instant bank transfers through APIs to mobile wallets, both consumers and merchants have been opting for digital alternatives more and more.
• Automation:
  Growing automation in b2b payments is resulting in frictionless, efficient and near error-free end to end payment flow.