Trend Talk: Electronic Payments And Life After COVID-19

Speak with people responsible for any type of payments flow today, then find the one who isn’t keen to embrace the world’s newest and best financial tech. Just kidding. No such person exists.

“I haven’t spoken to a client in 10 years, even when I was at Visa, that didn’t want to move fast to become innovative,” i2c President Jim McCarthy told PYMNTS in the latest in a series of Trend Talks.

Even during boom times, small and medium-sized businesses (SMBs) do a balancing act, driving cash flow while keeping an eye on compliance, risk, vendor/supplier relations and many other moving targets on the radar of small business owners. And like all life-altering events before it, COVID-19 has exposed weaknesses in systems large and small, from the very simple to the highly complex.

The fragility of America’s preeminent healthcare system is part of that new awareness. Another is the instability of many SMBs that wanted to embrace innovation but felt compelled by cash flow and capital to prioritize other investments. Since virtually no one saw this one coming in time to stop the devastation anyway, some were simply better prepared going in, McCarthy tells PYMNTS.

“I hate to say it but there’s that kind of … haves and have nots” dynamic happening with SMBs impacted by the COVID-19 pandemic, he said. The “haves” in this particular situation are those companies “… that were prepared, not so much for the pandemic, but they had moved to electronic payments [and had] really more or less digitized, not only the front end of their business but the back end.”

All businesses have sustained a shock, but those that had implemented “electronic invoicing, electronic bill payment remittances … for a global … ecosystem of payments,” he said, were in a better position to weather the initial hit and are more likely to feel confident about making it through.

For stable companies and for those needing to improvise and forge new relationships with new lines of credit, trade finance is getting more attention. “We’re trying to help our clients … get to the other side of this,” McCarthy told PYMNTS. “This is something that’s happening to everybody. It’s not unique to any industry. Clearly, there are some industries and verticals that are more impacted than others, but … even if it’s not direct financing, I think we’re all trying to find ways” to help clients make ends meet.

While entire economies and companies of every size and description reorganize around new business models and market conditions, as trillions in stimulus cash makes its way to consumers and business owners, there’s energy and optimism about the future in some parts of the financial ecosystem.

Despite macro challenges galore, “… the FinTech space seems to be alive,” McCarthy said, pointing to news of the day about BlueJeans being acquired by Verizon, and one deal that he feels more accurately reflects the mood in FinTech circles, SoFi’s acquisition of Galileo.

“I think in other cases there’ll be a lot of opportunistic acquisitions” post-COVID-19, McCarthy added, saying, “I can tell you that the capital markets are alive and well. There are a lot of great growth equity companies, private equity companies … that are well capitalized. They’re looking at this as an opportunity to either invest and, or … drive transactions.”

The wider B2B payments landscape will continue its march away from paper checks and cash, perhaps on the double-time now because no one will want to touch paper in the aftermath of COVID-19. Joking that, “Cash is always a dirty word. Now it’s a dirty word for other reasons,” McCarthy said that in 2020, “If you’re writing checks … it’s kind of shocking.”

B2B cross-border payments will also undergo change in a post-coronavirus world, but here again, some companies find themselves better prepared than others thanks to early adoption of APIs and platforms.

McCarthy told PYMNTS that “… as innovators have come into the market, whether it be Airwallex or others … they’ve sort of taken [pain points] out and made it very easy for their clients to look at … [where they] want to move money, at what price point … and under what settlement terms. They’re simplifying that and again, you’re going to see clients follow.”