With the explosion of digital payment innovation that has occurred over the last several years, how come the business-to-business (B2B) sector has been slower than most to realise its potential?
BlueSnap EU CEO & VP of Product, Brian Gaynor, outlines some of the barriers that are preventing smaller B2B firms from adopting various digital payments and shares what he believes is the most optimal payment method that is dominating the space today.
Payment Expert: Firstly Brian, B2B payments have typically lacked behind the digital payment wave. How is this the case and why is it critical for adoption to increase in fear of being left behind?
B2B customers are buying online 74% of the time and now more than ever, it is important for businesses to provide a seamless shopping and payment journey. As these consumers become more accustomed to the convenience of digital payments, their demand for a touch-free experience increases. However, B2B payments have not been able to keep up with this task.
There are multiple reasons which contribute to this, starting with the perceived cost of implementing a digital payments platform being too high. For example, integrating with existing accounting ERP systems could be preventing adoption or the company might be unwilling to disrupt a familiar process.
However, this doesn’t warrant a pause in modernisation, especially given that digital payments help enhance efficiency and overall cash flow forecasts, which positively influence customer service. Digitisation also automates processes, freeing employees’ time to focus on more substantive tasks, rather than repeatedly checking the bank statements to see if a payment has arrived.
If business leaders aren’t looking to modernise their B2B payment processes, they risk losing customers to companies that are. Convenience is key and if businesses are unable or unwilling to adapt to the demand for seamless payments, customers will find a business that better suits their needs.
PE: Is direct debit the most optimal payment method to adopt and which methods are best in comparison to direct debit?
Direct Debit is a viable low cost method of payment, where you have a trusted long-term relationship with your customer. Direct debit requires an upfront set up and you do not receive the funds for a couple of days, and even then they can be pulled back with the guarantees within the scheme.
It is suited to a long term relationship that covers that set up investment, and where you trust the customer to ship your goods even with their options to pull a payment back.
Alternatively, card payments give more immediate certainty as you can authenticate the customer and authorise their payment up front. It may cost a little more, but it has the security of the card program rules to help you manage any disputed payments fairly.
The newer request to pay by bank methods are cheap and have less chance of the payment being revoked, but the interface for making a payment can be clunky and can dissuade a customer from completing the sale – a payment method to consider for the longer term, or as an alternative where the infrastructure is reliable in certain countries.
PE: What are some of the barriers in the way for small businesses from adopting digital payment methods?
Small businesses have limited resources, so for them, the cost of investing in digital payment infrastructure is higher than that of established companies.
It could also be that these businesses have an existing payment infrastructure that is incompatible with digital payments – “It works, so why change it”.
Operating with smaller teams and typically a smaller budget can make digital migration processes seem like a daunting task, but it can be really worth the effort if you can provide the payment methods your customers want and unified reporting that allows for a simple single integration with your accounting ERP systems.
PE: Is the industry in danger of an oversaturation of digital payments and how could this be mitigated?
There is change happening in the payments market, with new ways of paying coming along and others disappearing. Evolution in the sector equals innovation which more often than not means new products, offerings, and added services becoming available. This doesn’t mean that we’re operating in an oversaturated market, it’s just a sign that we’re developing alongside payment trends.
Businesses should ensure that they’re bringing the right payment methods to their customer base and maybe getting rid of some old ones (Cheques anyone?). They can do this by acknowledging the payment trends seen in their areas of operation and evaluating how to best cater to them.
This doesn’t always mean that a brand-new digital payment offering is needed. It could come in the form of tuning their existing offerings or simply letting customers know that they offer their preferred payment method – it’s an ongoing process and it isn’t one to be taken lightly.
PE: Lastly Brian, and thank you for your time, how much of an importance can automated technologies play a role in the digital payment process for both the customer and business?
Automated technologies can significantly improve efficiency. By taking care of workstreams like invoicing, implementing requests from customers, and checking CRM systems, technology saves employees’ time.
This allows businesses and their employees to work more efficiently, spending time with customers and ultimately improving their products, services, and digital payment offerings.
Provide your customers with the payment methods and access to their invoices that allow them to do the administration for you! For customers, business automation typically results in faster transactions, secure payments, and a more convenient payment process.
