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As globalization and outsourcing have risen in popularity , speedy cross-border payments have become an increasingly vital part of the B2B payments landscape. The B2B fintech sector has flourished, and investors are swarming to it like bees to honey. In ten years, according to a Forbes article, the number of B2B fintechs that go public will triple, generating well over USD 1 trillion in total value. The payments industry will most likely remain a major focus for global investors. Open Banking in particular, is anticipated to accelerate the integration of payment solutions. In addition, PaaS, BaaS, Virtual Cards, and BNPL are spotlighted.
This article discusses how the fintech industry is reshaping the global business-to-business (B2B) payments landscape.
1. Instant global payments
As globalization and outsourcing have grown in popularity, the importance of rapid cross-border payments has grown in the B2B payments landscape. Therefore, payment platforms must ensure that they can deliver cross-border payments as rapidly as possible, and minimizing the number and number of interruptions encountered by each payment is crucial. Traditional means such as wire transfers usually fall short of this objective, as they take a relatively long time to clear (up to several weeks in the worst situations) and are especially susceptible to costly conversion fees.
In the past, it was only possible for large companies with major accounts in each country to make payments across borders, but today, even small businesses will be able to make instant payments as a result of fintech. For example, iPay allows for instant payments between USD and Euros, GBP and Euros, and AUD, NZD, CAD, EUR, and AUD. With the introduction of online payment systems and other advances in technology, more and more people are transferring funds on a global basis, meaning payments can be made almost instantly.
B2B payment platforms will be required to utilize internationally integrated payment corridors that are linked to local payment infrastructures in order to circumvent impediments and quickly resolve any hiccups in order to ensure that cross-border payments can be made without incurring delays or additional fees. This will be reinforced by the use of a wide variety of payment licenses to facilitate payments in several locations, and can be expanded via connections with payment partners to enable access to a larger network of payment corridors and payment licenses. Enhanced worldwide connectivity will enable quick, frictionless, and dependable payments, which will be crucial in an era that values quick payments more and more.
2. Automated payment process for lower costs
Automation developments has increase the benefits of integration by enabling payments to be supported by cutting-edge technologies like artificial intelligence, machine learning, robotic process automation, etc., which will supplement the data-driven improvements mentioned in the preceding sentence. This will make it possible to deliver payments with a lot more accuracy and speed than what can be achieved through manual operations.
Companies will seek payments that can travel through all the necessary stages without requiring manual involvement, speeding up the transfer process and lowering the potential for human mistake to enter the process as speed becomes an increasingly important demand for B2B transactions. The eventual result will be an increase in real-time, frictionless payments that only require the barest amount of human interaction.
3. Payments are becoming digital with cashless trend
The death of cash has been greatly exaggerated, but it is true that cashless payments are on the rise across the world. With the rise in digital payments, we can expect to see digital or electronic invoices and statements. This means that banks will have less to store, and businesses will have more information at their fingertips. We are already seeing this happen with some of the largest banks in the world. Platforms like iPay have become popular with smaller businesses which are unable to afford their own payment processing systems. While fintech has made it easier to send money from one country to another, this has also caused costs to decline drastically. A rise in cashless payments means that there is no need for banks now to store huge amounts of cash in reserve, which reduces their costs significantly.
4. Reduced FX risk, and cost
Fintech is helping reduce the risks associated with global payments. The banks themselves are reducing the cost of foreign exchange, which means that businesses can take advantage of global markets with reduced fees or no fees at all. Being a subscriber to multiple currencies can also be expensive as many banks charge different rates for each currency. Multi-currency accounts are often designed with FX risk in mind, requiring customers to use arbitrage strategies – typically by selling a high premium currency and purchasing a low one – in order to keep costs down.
5. Real-time fraud and money laundering detection
Fraud is a constant battle for many organizations, and it may be as old as business itself. In 2021 alone, 49 % of businesses reported serious payment fraud attempts, with 15 % of all businesses losing money. This kind of oversight would never have occurred if cashless transactions or real-time KYC checks were in place, as funds could be transferred and moved instantaneously. A single case of fraud can cost an organization more than US$1.5 million.
Automated fraud detection, which looks for suspicious payment transfers or supplier invoices, is a key component of modern payment solutions. With the introduction of anti-fraud regulations, compliance is becoming increasingly important where technology like Blockchain can provide a secure platform on which businesses can keep records such as client lists and personal information to comply with all laws and regulations. Without blockchain technology, a business would be vulnerable to fraudsters who sometimes use stolen or intercepted information. In addition, blockchain technology is being tested and developed in this area to detect any suspicious transactions and help law enforcement agencies in their efforts.