Analysts continue to flesh out their predictions for payments and FinTech in 2017, but one can never truly know the exact direction an industry will take. The B2B payments space is positioned to go in multiple directions as regulations and faster payments initiatives offer new opportunities in speed and efficiency, as technological innovation improves corporate payments and cash management and as market conditions, like globalization, introduce new demands and pressures for businesses and their financial services providers.
Executives from Payoneer, NCR, FTV Capital and Ingo Money touch upon all of these trends as they tell PYMNTS their own visions for B2B payments next year. Find out what they had to say below.
Richard Gilbert, Director, SME Partnerships & Business Development, North America, Payoneer:
“First, advanced technology and new functionalities in B2B payments will turn directory marketplaces into transactional marketplaces.”
“Turning the page on 2016 and looking toward 2017, payments and escrow solutions are enabling traditional directory-based B2B marketplaces into transactional marketplaces, where the merchant and supplier can find each other, solidify the terms of the contract and carry out the transaction, all through the online platform. Ultimately, these new functionalities will significantly expand the capabilities of B2B marketplaces and enable businesses to be paid in a more timely and efficient manner.”
“Second, global B2B transactions will continue to increase in frequency.”
“Today, 58 percent of SMBs already have international customers, while 72 percent plan to grow their international customer base by 2017. Moreover, about 96 percent of these small businesses report feeling confident about conducting business abroad. As economies continue to become more global and international trade, particularly with emerging economies, becomes easier, more and more businesses will look to pay partners, suppliers and contractors around the world and thus seek out simpler, more transparent payment solutions. The globalization of B2B transactions is therefore a trend that will only continue to increase as eCommerce technology advances.”
“Third, B2B payments in developing markets will outpace mature markets.”
“The increasing availability of technology has allowed entrepreneurs from all over the world to tap into the global market, aided in particular by marketplaces like Amazon that have lowered the barriers to international expansion. In addition, many developing economies around the world have seen a growing middle class and the rise of a more digitally connected and global generation. Together, these trends have created a transformational change in emerging markets. According to recent estimates, China’s consumer economy will expand by about half, to $6.5 trillion by 2020, and eCommerce in India will grow 67 percent into a $38 billion market — a tenfold growth since 2009. As emerging markets continue to increase their access to digital resources and marketplaces, they will ultimately seek out easier and more cost-efficient payments solutions as they progress.”
Andy Brown, Marketing Director of Payments, NCR:
“One challenge that will gradually be overcome in 2017 with the move to ISO 20022 is the availability of information with the payment transaction that will make reconciliation much easier. Currently, businesses will receive a payment and not know what it was for, and linking that back to an invoice number or a purchase order is challenging and sometimes can take many emails and phone calls to resolve with the danger of a customer being marked in arrears when they have actually paid. As ISO 20022 becomes more adopted, much more information can flow with the payment and make reconciliation easier and more reliable.”
“While a lot of the talk in PSD2 (the pan-European Payment Services Directive) is about helping consumers, there is also benefits from this in the B2B world. Banks will publish APIs that allow access to bank information and to execute payments. Out of this will be a set of services provided by ‘third-party providers’ that can use the bank information or execute payment requests. Today, some of these are very basic services that are being provided, such as information about interest rates on accounts. But this is going to grow in sophistication over time. So, I’m sure there will be business service apps emerging specifically for the business community, perhaps to source office space, and including all the processing to pay for that through direct access to bank services.”
“Lastly, biometrics will significantly improve customer authentication in the business banking world, reducing the need to remember complex passwords. Combined with access to business accounts through mobile technology, it will make it easier for busy executives to approve payments. Obviously, the current popular biometric is a fingerprint as used on Apple and Android phones. But more techniques will become accepted and the technology moved to tablet devices, which are often used in business to manage the banking activity.”
Chris Winship, partner, FTV Capital, and board member, VPay:
“Consolidation, market inefficiencies, changing regulations and the ever-expanding demand for eCommerce capabilities are four top factors that will continue to drive growth opportunities in the payments industry in 2017.”
“As growth equity investors in payments for nearly two decades, we’re seeing the already-massive payments industry experiencing an unprecedented period of rapid, disruptive change. In 2016, we saw significant innovation and adoption in front-end technologies, such as Apple Pay, Venmo and Square. However, the payments processing (back end) fails to keep pace due to siloed legacy systems and burdensome regulations. But in 2016, the industry saw progress.”
“I expect the industry will continue to consolidate in 2017. In a massive market like payments technology, the big players will get bigger, but this consolidation allows the medium-sized players to capture large segments of customers that value exceptional customer service, migration guidance and tech support — attributes the giants can’t deliver as effectively and efficiently. We saw early signs of this trend when CardConnect capitalized on the merger of a large competitor and subsequently created the market opportunity to go public in August.”
Drew Edwards, CEO, Ingo Money:
“The digitization of the paper check at the source: 2017 will see incredible growth in business push payments. Businesses, banks and merchants are now able to send funds to their customers’ and employees’ debit, prepaid and credit card accounts and mobile wallets in seconds. In turn, these funds can be accessed immediately by the recipient to make purchases, pay bills or withdraw at an ATM. It digitizes the paper check.”
“A variety of studies show that issuing a paper check can cost a company anywhere from $3–$10 per check and can consume as much as three weeks of time for printing, mailing, receipt, deposit and clearing. With instant push payments, companies can reduce their costs substantially, while building customer satisfaction and loyalty with real-time, guaranteed funds available to spend in any account they choose.”
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