Invisible payment and the rise of frictionless B2B transactions

Are invisible payments the ultimate end goal for businesses?

Naturally, payment providers are aiming to reduce the friction associated with payments and make the whole experience more seamless.

The result? Less time and effort. And easy payments often translate to more transactions.

We are already seeing this in practice in some contexts, powered by digital payment platforms and apps that enable new shopping experiences. But while invisible payments are starting to take hold on the consumer side, how and when this latest payment trend can or will be applied to B2B payments is another story.

And that’s the story we’ll be exploring today as we look into invisible payments and their potential in the B2B space.

So, what is invisible payment and what does it mean?

What is invisible payment?

Invisible payment refers to payment transactions that occur without any visible interaction between the customer and the payment system.

At no point do you click, tap or otherwise manually initiate the payment, at least not directly. Instead, it happens in the background as a part of the transaction or service being provided – think of how payments work on Uber, where the payment is initiated automatically at the appropriate moment.

In that case, the 'pay' button is replaced with a more contextual command, with the payment happening automatically once the service has been provided. This is possible as these platforms require you to input card details as part of the setup process which can then be charged.

Invisible payments can take many forms, such as mobile payments, contactless payments, and even voice-commanded payments, and can be implemented in essentially any scenario where a payment is being made – that includes e-commerce, brick and mortar stores, and subscription services.

Benefits of invisible payment

The main benefit of invisible payment is that it makes the payment process as seamless and frictionless as possible. It reduces the burden of the traditional payment process by cutting down on the time and customs necessary to make a transaction.

Most notably, you no longer need to manually enter your payment details with each transaction, making things more convenient and secure. Merchants also benefit from invisible payments – it results in a reduced risk of abandoned carts while improving the overall customer experience.

But what about businesses?

There are a few clear benefits for businesses when it comes to invisible payment:

Faster payments

B2B transactions can be processed faster, reducing the time it takes for businesses to receive payments.

Improved cash flow

By receiving payments more quickly, businesses can improve their cash flow and better manage their finances.

Increased efficiency

Invisible payments can streamline B2B payment processes, reducing the time and resources needed to manage payments and invoices.

Reduced errors

The reduced reliance on manual data entry and the use of automation means less errors for B2B transactions.

Better security

Enhanced security features such as encryption help reduce the risk of fraud and unauthorized access to sensitive information.

Improved supplier relationships

Businesses can build better relationships with their suppliers, improving collaboration and avoiding payment disputes.

That’s all well and good – but how do invisible payments work behind the scenes?

How invisible payments work

With a typical ‘visible’ payment, you would need to provide a card number when you make a purchase. That means taking out either your plastic card or virtual card and interacting with the POS or entering these details into the website or app.

With invisible payment, you’re not required to present your card number at the point of purchase. Here’s a look at the process:

  1. Payment authorization: You initiate a payment transaction by either tapping your contactless card or phone, speaking a command to a virtual assistant, or performing some other contextual action that authorizes the payment.

  2. Payment processing: Once the payment is authorized, your payment details are transmitted to the payment processor, which validates the transaction and debits the appropriate amount from your account.

  3. Payment completion: The payment processor confirms that the transaction has been completed, and you receive a confirmation that your payment has been processed.

The most important step of the process when talking about invisible payments is the payment authorization. This needs to be as seamless, frictionless and, well, invisible as possible in order to provide the optimal experience.

As mentioned, that can involve a voice command to your virtual assistant of choice, a contactless payment using your mobile phone, or even just placing products into your basket at a store. We’ll get into examples of invisible payment shortly.

The technologies behind invisible payment

The apps, websites and stores that are providing this service all rely on a robust digital system in order to quickly and securely facilitate payments. It’s a combination of an omnichannel approach, Internet of things and automation when you break it down.

The underlying trend works through the use of a payment account – details you often need to enter when initially setting up your account with whichever service – which can then be charged ‘invisibly’ moving forward.

It’s really as simple as that. When you use Uber, the button you press to book your ride doesn’t necessarily say ‘Pay’, but as soon as you tap it, the payment is authorized. These contextual commands are just one way of hiding the payment process.

But perhaps the more impressive kinds of invisible payment work thanks to Internet of Things and other tracking technology.

For example, face or fingerprint scanners can be used to identify you and thus link your purchase to your account. Then, as you walk around the store and place items into your basket, cameras and sensors on the shelves can detect which items you take and thus calculate how much to charge. When you’re finished, you can simply walk out the store – again identified via sensors and scanners.

Sounds futuristic, right? Well, here are examples of invisible payment in action today.

Examples of invisible payments

There are already plenty examples out there that more or less completely ‘remove’ the payment process.

Amazon Go is an extreme example, where customers can simply walk in, take their products from the shelves, and walk out. As in the example above, some combination of sensors, IoT devices and other tracking technologies are able to determine who took what and then debit their account accordingly.

To a lesser extent, the ‘one-click buy’ button on the Amazon website also counts. In China, facial recognition is starting to take hold in some shops, where facial scanners are used for identifying customers and debiting their accounts.

At AirPlus, we’re piloting invisible airport parking payment with Frankfurt Airport owner, Fraport. You can simply drive into and out of the car park – your vehicle will be recognized via its registration number and other means to identify you. Your payment will then be deducted from your company’s centrally billed account.

Then of course there are the well-known platforms like MaaS-app Uber that carry out the payment in the background, being completely facilitated through the application. The same is true for procurement platforms, where a large part of their appeal is simplifying the payment process for businesses and professionals.

We’ve covered what invisible payment is – so how popular is it?

How popular is invisible payment?

The invisible payment trend is quickly becoming the norm amongst consumers, with an expected $78 billion having been processed in 2022. [1] One study found that just over 80% used stored credentials to pay for a product or service. [2]

It’s easy to understand why it’s so popular too. Not only is it fast and convenient to pay this way, it’s also becoming more common in the services we use frequently.

Here are a few key facts and figures that help explain the rise of invisible payment:

Increase in mobile payments – Mobile devices are perfect for payments – including invisible ones. The fact that adoption of mobile payment is expected to reach 4.8 billion by 2025 means that we may also witness a sharp rise in invisible payments too. [3]

More contactless payments – Like mobile payments, contactless also provides a seamless user experience. In the next five years, the contactless payment terminal market is predicted to see a CAGR of 25.86%. [4]

More online and e-commerce purchases – E-commerce is a prime platform for enabling invisible payment too. According to Forbes, 24% of all retail purchases are expected to occur online by 2026, up from 20.8% in 2023. [5]

In general, the digital payment market is expected to grow – and by some margin. As these formats help facilitate invisible payment, things are looking all the more promising.

There are some hurdles here though. The EU’s directive requiring the use of strong customer authentication is one such example, though this can be overcome by providing a high level of security or when only used for smaller payments under the threshold.

Anyway, the change towards invisible payments is more of a transition where, over time, more and more elements of the payment process are automated, removed or otherwise made invisible.

From consumers to businesses

While consumers often enjoy the greatest level of innovation in their payment options, the same can’t be said for businesses. Why is that?

We spoke before about how changes in demographics and expectations are pushing forward digital innovation for payments, at least for consumers. Should we not expect that shift in demographics and expectations to then make its way to the corporate world?

Well, it’s possible. But one argument is that businesses need to focus more on regulation, safety and security. And that's not to mention the need for invoices (or increasingly electronic invoicing), VAT documents and other paperwork.

This is understandably important but means that such innovation is likely to take time. Legacy systems and outdated technologies are also rife, even among well-established businesses.

For them, significant investment would be needed to modernize their payment processes to include digital payment platforms and compatible payment portals.

Their approach to working capital would need to be reworked too in order to compensate for the faster payments enabled by digitalization, a precursor to invisible payments.

A level of complacency may also be playing a role in the slow uptake of new payment innovations. Consider how a large portion of B2B payments in Europe are still happening through bank transfers – Kaiser Associates puts the number at 88%. Even as late as 2019, 49% of businesses in the UK were paying suppliers using paper checks. [6]

While there is nothing inherently wrong with this method of payment, it does appear lacking when you compare it to modern payment solutions. That’s why there’s now a considerable shift towards more modern (read: digital) means of payment in the B2B space. You could describe it as the consumerization of business-to-business payment.

Digital payments – A step in the right direction

Thanks to the uptake of digital technologies, faster and more flexible payments are beginning to be adopted in business contexts.

So, what does this mean for invisible payments? It’s quite promising, actually.

As businesses begin adopting more digital and online-friendly forms of payment, they will start to get access to channels that enable invisible payments. In turn, more investment and innovation will then focus on supplying this new demand, creating a positive feedback loop of sorts.

Of course, we’re not expecting multi-million dollar deals to be paid invisibly, but instead the more incidental, smaller and routine payments will benefit. Think procurement or business travel expenses.

Here, integration is much simpler to execute and automate, with the added benefit of increased data for making insights.

In particular, e-commerce is a primary use case for this format. It makes for a great example of the consumerization of B2B payments, something we may start to see take hold in the market and pave the way to innovations like invisible B2B payments. After all, providing a seamless experience increases the comfort for the customers. Why shouldn’t businesses expect that?

That is a question that suppliers will start to answer, helped along by a slew of Fintech companies building solutions that will make invisible payments compatible with the needs to corporates.

So, demand is already growing for reduced friction in the payment process, evidenced by the growth of mobile wallets and contactless payments, and invisible payments are the logical next step.

What comes after invisible payment?

Innovation is continuing, but where does it all end? ‘Invisible payment’ is quite a broad term that encapsulates many different potential ways to pay – as long as they are seamless, frictionless and invisible.

We are already at least familiar with paying automatically through mobile apps tied to bank accounts when using ride-sharing services, but facial scanning like seen in China is also already a reality. Perhaps the ‘Amazon Go’ concept will take off, offering arguably the most invisible payment there is right now.

Instead of a bank account, maybe cryptocurrency wallets will take off and simply payment even further thanks to blockchain technology.

When you apply this to businesses, you will cut down significantly on time, resources and possibly even fraud. Thus, with the consumerization of business payments that is being led by digital technologies, we can hope to see invisible payments taking off in the workplace.

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Banner photo by Laura Chouette on Unsplash








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