The COVID-19 pandemic was one of the most disastrous global calamities of the century. It was inevitable for businesses to neglect or nullify the impacts of COVID-19 on global economies. Barren grocery shelves and the screaming silence in the markets led to the unwanted closure of hundreds of thousands of businesses in B2B and B2C markets.
The pandemic also exposed the operational inefficiencies hiding behind the "long-term projects," and they soon became liabilities for the businesses. Finance professionals could only identify their AP processing flaws once the lockdowns forced companies to shut down offices across the globe.
Paper invoices, a source for the spread of infection, only decorated empty buildings but asked important questions. How can you print checks or send invoices when you cannot enter the office?
The pre-pandemic payment processing trends are no longer efficient, leaving the corporate world with no option but to switch to online payment processing.
The text to follow will allow you to learn about:
- B2B payment trends during COVID-19
- Corporate payment trends in the post-Covid era
- Benefits of online payment solutions for businesses
Impact of the COVID-19 Pandemic on B2B Payment Trends
Formation of a Cashless Society
Customer payment habits changed drastically during the Covid era within the Business-to-Business (B2B) and Business-to-Consumer (B2C) sectors. Millennials, the majority population in North America, were a strong force in driving businesses to online routes. Paper and cash payments became less and less common, while ACH began surpassing traditional payment routes.
- Cash and check were among the biggest B2B payment trends in 2019, holding 50% of the payment market share. That value declined to 45% in 2020.
- ACH payments surpassed the $10 trillion figure (39.2% market share) in 2020 for the first time ever.
- Other notable payment methods, like card payments and wire transfers, gained popularity.
The transformation from paper payment to online channels was harder for B2B. That is only one reason why the decline in U.S. B2B payments in 2020 was faster (-7.1%) than projections (-4.9%), while the actual sales were $25.539 trillion.
What started as urgency is now a trend, and consumers consider themselves more digital. 39% of customers shop online daily or weekly, and 23% of customers make at least one online purchase daily.
Increase in Online Payments, Specifically ACH
Online payments were on the rise due to the millions of first-timers. B2C businesses with digital presence were already among the winners. Many businesses could complete the transition early, while others took time. On the other side, offline retailers and traditional brick-and-mortar stores suffered because of forced closures.
The B2B industry also moved to online and faster payments, especially through ACH. This was also mainly because of an increasing number of card payment frauds. B2B was an exceptional contributor to the adoption of ACH payments as the ACH network payment volume increased by $2.3 billion (8.7%) in 2020.
The Future of Corporate Payment Trends (B2B and B2C)
The corporate sector is all set to stick to the following payment trends in the future:
The "don't put all your eggs in one basket" idea is more relevant for Accounts Payable (AP) departments than ever before. Enterprises have realized that having in-house solutions for "everything" is not a smart move. That's because the corporate sector still needs to develop long-term, pragmatic solutions for invoice handling and off-site check printing.
The best possible solution for B2B companies to combat these issues is to partner with secure payment processors. It will help them manage check printing and invoicing while accessing modern-day modes of payments such as:
The Decline of Checks
Checks used to be the most prominent payment method in the B2B sector, but they are facing a sharp decline now. An AFP payments survey in 2020 stated that almost 60% of businesses are moving from checks to more convenient online options. Here are the three primary reasons:
- The average cost to issue a check payment is $26 (including postage)
- Companies are not willing to spend their human resources on writing, distributing, and collecting checks
- The chances of fraud are higher in paper check payments
Willingness to Embrace Digitalization
During the pandemic, customers or end consumers could order household supplies, groceries, etc., through simple clicks on apps. Businesses also are interested in this type of convenience. Modern online payments are:
- Allow one-click purchasing, and
- Provide multiple options to choose from
A Forbes study in 2021 found that businesses offer at least 4 digital payment options, including:
- Wire transfers
- Credit card payments
- Real-time payments
- Digital wallets
Switching to digitalization has become mandatory for B2Bs to stay in the competition.
The sudden shift from paper to digital payments also paved the way for cybercriminals. Many businesses were unaware of different fraud tactics. As per AFP reports, approximately 71% of organizations became victims of payment fraud attempts in 2021.
Where businesses desire convenience and speed, it is also vital to prioritize payment security issues. This is only possible by partnering with secure and certified payment processors, ideally choosing a Nacha Preferred Partner for ACH Processing.
Why Are Online Payments Beneficial For Businesses, Especially B2Bs?
Digital payment processing streamlines supply-chain billing and helps businesses get paid faster. Here are the top benefits of online payments for businesses:
- It is easy to make every invoice payable digitally. Businesses may add payment links directly to the invoice and share PDF copies.
- Digital payments bring more diversity to payment processing as there are multiple ways companies collect payments. Common methods include IVR, ACH, credit cards, hosted payment portals, SMS invoicing, email invoicing, e-checks, etc.
- Recurring payments make daily, weekly, or monthly payment collections faster and more convenient for customers. They don't even require vendors to send monthly reminders or invoices.
- Payment security is indeed the most significant advantage of online payments. However, it is only possible by partnering with a PCI compliant payment processor.
- Lastly, payment processing gateways are easily integrable and minimize the need for extensive human resources.
Partnering with iCG, a Trusted, Nacha Preferred Payment Processor
Research expects the global B2B digital payment market to hit $31.3947 billion by 2031. More importantly, traditional paper payment channels are most likely to become obsolete in the future.
Partnering with a trusted payment processor will not only allow you to stay competitive, but you can keep up with the changing customer preferences. iCheckGateway.com provides an array of online payment solutions and check verification services.
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