B2B payments have traditionally been defined by legacy versus electronic mechanisms.
But in today’s nuanced and dynamic landscape, the ongoing evolution of B2B payments is increasingly marked by solutions and innovations that strike a delicate balance between traditional methods and emerging technologies.
PYMNTS sat down with Eric Frankovic, GM of corporate payments at WEX, to discuss the three hidden assets businesses should look for in their payment solutions: payment mix, data availability and provider stability.
Despite the proliferation of electronic payment methods, paper checks remain a persistent feature in B2B transactions. Frankovic noted that while the pandemic accelerated the shift toward digital payments, paper checks have made a resurgence — a resurgence accompanied by a corresponding increase in check fraud.
“We will eventually eliminate paper, but it won’t happen in the next five years,” he said. “The U.S. is still largely paper-based in many ways.”
He added, “Businesses must choose providers capable of handling a mix of payment methods, including ACH, wires and virtual cards, while providing consulting and support for paper checks.”
Still, as technology becomes more available and affordable for small businesses, the electronic B2B payments revolution is only likely to continue to gain steam.
Among modern B2B payment solutions, virtual cards offer numerous advantages, Frankovic said, including data transparency, cash flow improvements and faster payments, which benefit both businesses and suppliers.
He highlighted how virtual cards facilitate seamless data exchange, enhancing visibility into cash positions and enabling more accurate forecasting. “Virtual cards allow for everything to become very transparent,” he said.
And in an operating environment where effective cash flow management is more critical than ever, electronic B2B payments provide the real-time transparency needed to improve financial forecasting and decision-making.
“Understanding the specific goals of different businesses, from Fortune 100 companies to small local businesses, is key to leveraging payments to achieve those goals,” said Frankovic.
However, he noted that achieving widespread adoption of virtual cards with B2B will require building an ecosystem where all parties feel they are winning.
Against this evolving backdrop, providing stability has emerged as a key differentiator point. That’s because B2B payment solutions should not only provide automation and secure payments, but also must have the infrastructure and connections to grow and scale. Otherwise, companies will just be out shopping for a new solution in three years’ time, said Frankovic.
While the debate around which provider to integrate often revolves around startups versus traditional banks, Frankovic believes there is room for both.
“Historically, banks have dominated the landscape, but in the past 20 to 25 years, FinTechs have emerged offering best-in-breed solutions in specific areas of the procure-to-pay cycle,” he said. “WEX, for instance, offers a blend of traditional banking and cutting-edge FinTech solutions, creating a one-stop shop for corporate payments.”
Still, Frankovic also stressed the importance of a high-touch, high-tech approach to B2B payments. “Yes, we want digitalization and we want tech, but people remain at the center of what a successful program looks like … They fix problems, provide insights and use data to drive solutions. The quality and reliability of the team behind the solution should be a significant factor in decision-making.”
Part of the importance of provider stability — and ensuring the scalability and growth of B2B payments solutions — is the fact that the future of the B2B payments landscape is shaping up to be a transformative one, due primarily to two near-term advances: artificial intelligence (AI) and embedded payment solutions.
While the industry is still in the early stages of AI adoption, Frankovic sees significant potential, particularly in supplier enablement and fraud prevention.
“AI can help us understand payment behaviors and optimize payment terms, making virtual cards more attractive to suppliers,” Frankovic said. “Additionally, AI can play a critical role in fraud detection, helping us stay ahead of potential threats.”
As embedded payment solutions gain traction in the B2B space, businesses face the challenge of integrating these solutions into their existing technology stacks. Frankovic stressed the importance of deep industry knowledge and strong partnerships in overcoming these challenges.
“Integrating payments into complex tech environments is a struggle, but having a provider with the right expertise can make a difference,” Frankovic said. “Providers need to offer comprehensive solutions and have people with deep industry knowledge to navigate these complexities.”
Looking ahead, Frankovic underscored the value of collaboration within the payments industry. “The best companies are those willing to learn from each other,” he said. “By working together, we can deliver the best products for our customers and end users. It’s a small space, and we should leverage our collective knowledge to drive innovation.”
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