How Technology Is Transforming Business Payments

Rohit Gupta is the CEO and co-founder of Auditoria.AI, a pioneer in AI-driven automation solutions for corporate finance teams. 

The pandemic has been the single most significant business disruptor in decades. 

Enterprises scrambled as long-established business processes were rendered obsolete seemingly overnight. Social distancing rules were enacted, and offices closed, forcing employees into remote work. To adapt, organizations deployed digital technologies in unprecedented numbers and at historic speeds. Companies accelerated the digitization of their customer exchanges, supply-chain interactions and internal operations by three to four years. As a result, their deployments of digital products accelerated by an incredible seven years. 

The ripple effects from this dramatic transformation continue to reverberate within organizations. As a result, the payments landscape is finally experiencing some long-overdue changes. Business-to-business (B2B) payment processes were in dire need of an upgrade, and the pandemic only served as a magnifier. 

B2B Payments Need A Facelift 

Traditionally, corporations have been cautious about changing their payment systems, citing both privacy and security concerns along with a general lack of demand. Many organizations still rely on physical payment methods in the form of paper checks. There are alternatives to paper payments that coexist with checks, including Automated Clearing House (ACH), wires and cards, but these options have their own issues, as you’ll see below. 

With the advent of this virtual world, B2B organizations are being forced to address outdated payment systems that no longer work in this digital age. Enterprises now demand more payment options and faster processing from their payment systems. Convenience has become essential. Modern B2B payments need to function similarly to consumer transactions: instantaneous, easy and frictionless. Significant advancements in online security and privacy, as they relate to e-commerce and e-payments, are helping to alleviate many of the concerns that businesses felt in the past.

Globalizing Digital Payment Methods

As the migration from traditional to online commerce continues to gain momentum, payment options must follow suit. Business consumers are demanding support for contactless transactions, which rose by 41% in 2020. With such a connected world, the need also exists for globally focused contactless payment options. 

This demand still tends to fall flat with outdated and slow systems. Technology has begun to bridge that gap by creating a more seamless and instant funds transfer through online applications. While there may still be fees for calculating exchange rates, digital wallets and other e-commerce payment options, these options are still more cost-effective than credit cards. Further, these allow money to be transferred much faster than other methods such as ACH and wire. As technology continues to make its way into the realm of payments, machine learning and artificial intelligence (AI) will push the boundaries of finance, creating a much more level playing field across the globe. 

The Rise Of Artificial Intelligence

The rise of AI in the professional world could not have come at a better time. An unfortunate result of the pandemic is a much leaner workforce. With fewer employees, tasks must be streamlined for smarter work. Integrating AI allows for a smaller staff while also reducing the margin of error. More trivial tasks such as payment posting and remittance tracking, both of which often have a high risk of error, could be handled quickly and flawlessly by technology. 

AI can also be programmed for higher-level tasks such as payment behavior analysis, which consumes a large amount of manpower. Using AI for analysis provides instant feedback on payment trends and payer behaviors. Accounts receivable teams can harness AI to simplify the entire payment experience, minimize human error and reduce cybersecurity risks.

Buy Now Pay Later (BNPL) For B2B

BNPL, historically reserved for individual consumers, has been observed more recently in B2B markets. The BNPL option casts a much wider net for consumers who may not have traditionally purchased due to limited funds or credit restraints. 

Additionally, it increases the amount of spend, per transaction, due to the manageable and scheduled payments — often with no additional fees. Sellers do incur a small charge for the “loan.” Still, with the advance of AI, they can perform an in-depth risk assessment using a customer’s historical transaction data to guarantee repayment. This example is yet another case of AI advancing the payment world. 

The Role Of Cryptocurrency 

With the rise of AI and the slingshot effect of the pandemic, payment options are proliferating. When discussing the future of contactless digital payments, cryptocurrency should not be ignored. Although the past year has seen a rise in digital payment options, there needs to be a stronger focus on global solutions. 

Digital wallets and QR code payments are great, but they have limitations. These payment options are tied to individual banking establishments and use local currencies. Instead, cryptocurrency uses decentralized finance (defi), removing private institutions, or third-party intermediaries, from the equation. Additionally, the unified currency of cryptocurrency would eliminate cumbersome currency exchange equations. 

Of course, as with anything, the risks cannot be ignored. Cybersecurity is a big concern considering the entire process and currency live on the internet. There is still a great deal of growth that needs to occur for the world to adopt cryptocurrency and defi, but I believe it is the future of business. 

A key takeaway from the digital advancements throughout the pandemic is that technology is moving incredibly fast. Companies need to stay ahead of the curve to remain relevant. Look to technology as you grow for a much more streamlined approach to payments and a reduced margin of error.

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning and wealth management firms. Do I qualify?

Related posts