Advances in technology and a push towards “consumerization” in business-to-business (B2B) payments is resulting in providers offering more digital tools than ever before. A vast number of new partnerships and proprietary product launches have been observed in the commercial payments market in recent years, most of which are designed to increase automation and reduce manual processes. Banks, networks and fintech organizations are working together in an effort to displace the high number of checks that remain persistent in B2B payments.
As shown in Figure 1, commercial payment product investment has been most prominently related to virtual cards and accounts payable/receivable automation. Virtual cards, the fastest growing segment of commercial cards, appear to be a key avenue providers are exploring to help reduce the prevalence of checks in B2B payments. Virtual card tools are becoming increasingly embedded within broader accounts payable/receivable automation solutions designed to streamline payments for end-user organizations. The benefits of virtual cards—increased control, reduced fraud, improved visibility, rebate opportunities, etc.—are well documented, and pairing virtual cards with electronic invoicing and payment application services can generate significant value for an organization’s accounts payable and accounts receivable departments.
Figure 1: Industry investments fall into a variety of categories
Beyond payment technology, significant investment has been made in improving the customer experience through user interface enhancements. Providers are seeking to digitize the B2B payments process as much as possible, with online chat bots, digital assistants, online/mobile access to payment activity, and other consumer-like functionality being added to B2B payment solutions. As younger professionals who grew up in the digital age continue to progress to management positions, it is becoming more and more important for the B2B payment experience to mirror that of a consumer payment. Providers are building online portals for organizations and their customers to view payment (e.g., credit available, recent transactions, payment due dates) and collections activity. These portals are becoming more intuitive, with dashboards, charts and key trends often available directly on the home page.
Due to the complex nature of B2B payments and the high penetration of checks, it will be difficult to fully automate the B2B payment process. However, providers in the market are hard at work, and many of the tools available to end-user organizations are designed to do just that.