8 Ways FinTech is Transforming B2B Payments
In the last decade, the fintech industry has experienced exponential growth. At the end of 2021, the industry was valued at US$ 3.56tn with expectations to grow at a compound annual growth rate of 23.58% between 2021 and 2025.
But how is the FinTech industry reshaping the global business-to-business (B2B) payments?
Instant Payments Globally
While 50% of people in the US and UK still use cheques, the payment method is quickly becoming a thing of the past. Instead, they are being replaced with more efficient and more secure payment methods.
While modern payments methods for suppliers require an initial setup, they offer procurement and finance teams instant payment capabilities, better cash flow management, improved supplier relationships, and enhanced traceability.
Fraud and Money Laundering Detection in Real Time
Quite possibly as old as business itself, fraud is a continuous battle for many organizations. In 2021 alone 49% of firms reported serious payment fraud attempts, with 15% of all companies suffering a loss. A single case of fraud can coat an organization an average of over US$ 1.5mn. A core element of modern payment solutions is automated fraud detection which looks out for suspicious payment transfers or supplier invoices.
For any procurement function, having good communication with suppliers is crucial to creating a smooth running and efficient supply chain. With modern payment methods, both payer and payee can track the movement of money from the second it’s sent to when it arrives. Compared with traditional payment methods the amount paid will also be the amount received.
Reduced Bank Fees
Often traditional payment methods came with banking fees. Moving money through several banks- especially international ones- could result in a cut being taken from the total as a fee for moving the money.
Quite simply, when it comes to FinTech, the amount paid is the amount received with modern FinTech payment rails.
Reduced Foreign Exchange Risks and Costs
In addition to banking fees, procurement teams could be subject to foreign exchange gees and currency fluctuations with traditional methods of paying suppliers. With the use of modern payment solutions, the infrastructure in place offers near-instant payments excluding the money from being subjected to this kind of movement and FX risk.
Genuinely Digital Infrastructure
For FinTech payment companies, “infrastructure” means a global network of regulatory licenses and bank accounts. This means that FinTech can operate in multiple countries and open local bank accounts, therefore they can safely and securely bypass the traditional banking payment rails.
Mass Automated Payments
With the help of modern payment solutions, the procurement function can reduce the headache of mass payments. Previously a time-consuming and error-prone task, procurement teams can confidently send, with an automated solution, mass payments in batch form.
Application Programming Interface (API) Integration.
With multiple technologies cones an added layer of complexity, but with modern application programming interface (API) integration FinTech companies can connect disparate payment systems driving greater efficiencies.