Transaction trends: how real-time payments are driving innovation in the B2B space

The pandemic accelerated the move to digitisation and especially the move to cross-border. A lot of businesses had to go online during the pandemic if they wanted to survive. That opened an opportunity for businesses to hire staff and suppliers who live in other countries, which requires increased payments cross-border. So the pandemic accelerated innovation in those types of payments.

It has been similar to what we’ve seen in the B2C space. The move to real-time¹ payments has helped B2B cross-border to grow. Open banking technology allows businesses to pay directly from their bank account to suppliers in real time¹, which has taken off in Europe in particular. The move to individual processing and API-led individual payments, versus traditional batch payments, has also meant that businesses can offer cheaper and more bespoke pricing and facilitate payments in real time¹. In comparison, batch payments usually arrive the next day.

I think people have become so used to real-time¹ Actual fund availability depends on receiving financial institution and region. payments in their everyday lives. Why shouldn’t they apply to the B2B world? It’s effectively the same technology. So I think people are demanding the same experience of business partners. They shop around to find the players that can offer these faster, more agile experiences and facilitate real-time¹ payments. 

So it’s a natural evolution that started with the consumer. They use it in their everyday lives and then start to demand that in the B2B space.

If you’re a small business you don’t carry a great deal of stock, so it’s important that you can pay your supplier on time and receive the goods on time. Take the example of a small coffee shop. They won’t store a lot of beans because they don’t have the space. So it’s important that when they’re buying their beans, perhaps from Brazil or Venezuela, the supply arrives quickly but the suppliers won’t despatch those goods unless they’ve received payment. So I think the innovation in faster payments in the B2B space has enabled people to look further abroad for supplies at a cheaper price point, with the reassurance that they will receive those goods in time to be sold.

Data security is an important point. So, making sure your customers and your payments are safe and working with a secure provider are key. If you comply with the PCI DSS (payment card industry data security standard), you minimise the chances of something going wrong. 

Equally, tokenisation and open banking technologies help to ensure that payments are delivered correctly. And blockchain might be a bit of a buzzword but that technology is very much growing in the B2B space: information about the payment is available for everyone to see and all the data is carried through every transaction on the blockchain. 

There’s a lot of new technology coming through. Buy-now-pay-later solutions are arriving as options for B2B payments, following huge popularity with consumers. It allows a small business to obtain a line of credit, while the seller can receive the funds instantly with a third party acting as the credit provider. It will be interesting to see how that develops. 

We’re also seeing the growth in AI. Small businesses are relying on AI to help them automate payment flows, invoicing and so on. I think we’ll continue to see that in use as that AI capability becomes mainstream.