B2B Payments Transaction Innovation
Dr. Evangelo Damigos; PhD | Head of Digital Futures Research Desk
- Competitive Differentiation
Publication | Update: Sep 2020
According to Nick Maynard, lead analyst at Juniper Research Payment Transaction Innovation enabled by services including RippleNet and Visa B2B Connect will be critical in allowing these financial services operators to compete with innovative fintech start-ups and other non-bank industry players.
According to the Paypers research, the payment ecosystem and infrastructure continue to transform through increasing speed, connectivity and increasingly diversified transaction services. Therefore, besides the seven domains, two new domains are introduced. At the same time, the payment ecosystem is diversifying its traditional payment services with alternative transaction services.
David Deans, Technology Media Telecom analyst contests that Legacy financial service providers must revise their business models, or they will likely lose market share in a highly commoditization post-pandemic B2B payments environment.
Instant payment schemes are built on ISO 20022, which unlocks additional messaging capabilities. These can be used to inject transparency and build new services such as automation, which will add significant value to complex accounts payable processes," said Nick Maynard, lead analyst at Juniper Research.
Given that the current method of processing invoices and payments is so manual, there is significant upside potential for the introduction of automation to reduce transaction costs, increase processing speed and avoid currency exchange rate calculation errors.
According to Cashbook research,during the pandemic and the enforced lock down that occurred in many countries, there have been huge changes with Covid-19 payment trends for both B2B and B2C.
As we can below, consumer payment habits have changed due to the pandemic. B2C habits have carried over to B2B, with ease of use becoming the new goal. Millennial make up a large proportion of the workforce in North America, and they are driving the change online. Checks and cash were being used less and less previously and the pandemic has further accelerated this trend. ACH payments (digital transfers) look set to surpass checks in the US for the first time ever. More people are making digital and contactless payments now than ever before. People have embraced online banking and digital payments. Older customers have had to break down barriers and use online methods out of necessity. Society is becoming more and more cashless due to digital payments, which brings both advantages and disadvantages. Will more countries follow the lead of Sweden and become cashless?
There has been a huge surge in online payments during the crisis. With many people purchasing online for the very first time. Wholesaler retailers which had an online presence already have been big winners. A lot of the offline retailers have seen huge increases in sales such as grocery retailers, but many outlets have suffered due to forced closures. Although some have moved their business online in rapid time. A lot of companies are happy to remove paper in this manner, and accept digital payments as the future.
As more payments have been online, there has been an increase in online card fraud. This is why some people trust online payments. AMEX reported Q1 credit card traffic and usage is down in the B2C space from 2019 levels. However, we have seen that credit card usage is up in some areas of B2B, such as paying rent for properties in the real estate sector. MoneyGram reported an almost 25% increase in digital transactions in April 2020, compared to last year.
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The degree of necessity. Luxury products and habit forming ones, typically have a higher elasticity.
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