Fraud Fears Hold Back Real-Time B2B Payments

Now, now, now — that’s the chorus coming from companies when it comes to payments, and that demand is fueling progress in real-time payments. It is not only one of the major trends for 2022 but promises to take on increased importance in 2023 and beyond.

It’s a huge market: Total B2B payment volume is estimated to be over $125 trillion — four times the volume of consumer-to-business payments — according to Credit Suisse.

Significant challenges remain before the benefits of real-time payments (RTP) really start to come into their own. There are many reasons why businesses aren’t getting the real-time payments they so desperately want and need, and one trend fueling adoption may be on the wane.

Fraud remains first and foremost among the barriers to adoption of RTP in the B2B space, according to “Accelerating the Time to Realized Revenue Playbook,” a  Mastercard and PYMNTS collaboration. As the supply chain crisis eases and equilibrium ensues, pressure on payers to accelerate payment may ease. Yet, the certitude of receiving funds on a date- or even hour-specific basis may outweigh the obstacles to accelerating B2B payments through RTP.

Get the study: Accelerating the Time to Realized Revenue

Fear of Fraud

Eighty-four percent of U.S. businesses that already use real-time payments say that fraud is not an issue they experience when using RTP. This indicates that many firms may be under a false impression about how widespread fraud is among firms that use RTP rails.

Lack of Cloud-Native Platforming

Many businesses have legacy AP and AR platforms that predate cloud computing. This tends to be particularly true of SMBs with relatively low volumes of invoices.

Wonky Onboarding

Enrolling new suppliers and setting up payment agreements is a top barrier to digitizing B2B payments. Companies often underestimate the amount of time and resources this process takes. The prospect of the transition can cause inertia that introduces friction into the transition.

Treasury Travails

As interest rates rise, RTP presents something of a conflict of interest with float management. However, it is arguable that reciprocity in RTP adoption will result in canceling out any differential in treasury income based on holding money to reap its time value.

AP vs. AR Divide

In the past, they who had the gold made the rules. Some companies managed cash flows by extending payment terms to suppliers and accelerating them from customers.

The pandemic changed all that. In a supply constrained environment, the AR/AP playing field was leveled. Prompt payment became a competitive dimension in the frenzy to source materials in an epoch of scarcity.

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