The future of corporate payment: 10 trends to look out for
The future of corporate payment is a fascinating topic. In recent years, new technologies and platforms have made their mark in how we manage spending and make payments. This is especially true in the consumer spending market, where convenience is usually top of mind. But the needs of businesses – especially when it comes to regulations – mean that the corporate payment market is often a few steps behind.
Despite often playing catch-up, there is still a lot to be explored when looking into what lies ahead for the industry. But to get the full picture, we'll need to take a step back and look at wider society.
Societal trends
Needless to say, the payment industry does not live in a vacuum – it's impacted by the general state of the world. From the sentiment of a population to the demands of certain technologies and practices, we're able to see patterns and trends emerge.
There are broadly two different macro-level trends we're seeing that are trickling down to the payment industry: Connectivity and fragmentation and Customer experience-based decision making.
Connectivity and fragmentation
Despite increasing access to information across the globe, people are building communities with others of like mind and embracing counter narratives that fragment globalization.
- Building communities with like-minded people
People are leveraging specialized platforms to share skills and resources because they see themselves and their immediate networks as more trustworthy sources for advice than governments or brands. - Exposure to counter-narratives that prioritize local interests
Many citizens and politicians are seizing on the counterargument of putting their country first by imposing high tariffs or focusing on more jobs for locals, for example. - Increasing importance of purpose and values
Consumers are wielding their spending power to hold brands and industries accountable to corporate responsibility pledges ranging from sustainability to DE&I (Diversity, Equity & Inclusion). - Access to information is constantly increasing
People are increasingly able to access more goods, services, rights, and opinions, resulting in a polarization of culture where issues are fought at the national (as opposed to local) level.
Customer experience-based decision making
With increasing use of singular global ecosystems, demand for better customer experience is on the rise, and people are turning to fintech companies to find that.
- Connecting across singular global ecosystems
Consumers are opting for unique and global ecosystems that can meet all their different needs such as community, commerce, media, entertainment and financial services all in one place. - People are responding to fintech organizations
The desire to decentralize, offer alternatives, or disrupt the relationship with money and banks is leading to a variety of experiments that challenge traditional financial institutions. - Rising demand for great customer experience
Consumers are encountering radical improvements in the seamlessness of experiences (including B2C), resulting in dramatic expectations such as same-hour delivery or fast payment services. - Regulators can’t keep up
Lawmakers are unable to keep up with the rapid pace of technological development and societal change, like new products, services, and public sentiment (i.e. mobile work).
With all this in mind, we can start to zoom in on what this means for the payment industry.
10 current trends in payment
When it comes to corporate payment, we're witnessing multiple trends take shape, from changing customer expectations to unleveraged market potentials and new technologies.
1. Increasing expectations for seamless B2B payment experiences
With the recent shift towards electronic transactions, B2B buyers' expectations to resemble those of B2C buyers. We've seen this in the trend towards invisible payments, for example.
Expectations regarding payments revolve around simplicity and ease of use – simple online shopping experiences, multiple payment options, etc. [1]
2. Fintechs branding themselves as “data organizations”
Many fintechs will reinvent themselves into data organizations and data providers that happen to provide payments and other financial services in order to differentiate their organizations in the eyes of investors and the market. [2]
3. Surging interest in new forms of payment
As payment options like "buy now, pay later" and virtual cards become more common in B2C, it won't be long before they become the norm in B2B e-commerce as well. Since B2B transactions tend to be larger and more complex than B2C purchases, more flexible payment methods need to be made available to satisfy those demand and bring it closer to consumer-style experiences. [3]
4. Leveraging the potential of emerging markets
Investors will ramp up their targeting of jurisdictions considered to be 'under-developed' in terms of financial services. With the Northern Hemisphere already a crowded marketplace, more business is being done in regions like Africa, Southeast Asia, Latin America, and the Middle East. [2]
5. Future-payment is digital
During lockdown, the use of cash fell by anywhere between 10% - 50% in European countries. In contrast, the overall use of digital payments in Europe is forecast to grow by 70% in the next 3 years. [4] We're already seeing a growth of mobile payments, with more digital payment solutions likely to follow.
Gartner predicts that, by 2025, 80% of B2B sales interactions between buyers and suppliers will occur in digital channels. [3]
6. Using data to understand customers and open new revenue streams
Unlocking payment data is faster and cheaper than ever before.
This comes at a time where individuals and businesses now expect a high level of personalization and real-time service in all aspects of their lives. Therefore, businesses are finding new revenue streams in data-driven, non-financial services connected to traditional banking products, e.g., products created to help small businesses run more efficiently. [5]
7. New partnerships in B2B payment
Key market players are engaging in partnerships and collaborations to offer more comprehensive B2B payment solutions, which is projected to increase their overall profitability. [6]
It's not uncommon now to see banks, card providers, and fintech companies working together to solve common challenges, such as data, customer, and cash management, which will help simplify and enhance the B2B payment process.
8. Remote working leads to higher procurement expenses
It's no secret that remote working and virtual meetings are more common these days, impacting payment processes – and costs.
58% of B2B buyers now make purchases that have to be delivered directly to an employee’s personal residence, accommodating an increasingly distributed workforce as a result of the COVID-19 pandemic. [7] As a result of the acquisition of new devices and software for use at home, we can see procurement expenditure increasing.
9. Payments are going international
While we're witnessing a prioritization of local interests in some areas, we're seeing more and more spending happening across borders. The world economy is becoming smaller, and so payments are crossing borders more than ever.
By 2030, the total value of the cross-border payment market is expected to reach $290.2 trillion – a 53% increase from 2023 levels. [8]
This increase in demand will see more businesses and, to a lesser extent, consumers look for internationally compatible payment solutions. For example, the proposed central bank digital currency (CBDC) may take advantage of this growth.
10. Growing interest in AI and automation
AI came into the limelight in 2023 thanks to significant new developments, including generative AI. When it comes to payments, there are numerous different ways in which AI can be applied.
For example, payments can now be made through a chatbot-style virtual assistant using natural language, rather than a traditional checkout screen. AI also enables the Just Walk Out (JWO) tech in Amazon Go shops, and is well-suited to wading through data to identify and monitor patterns and trends.
And with the fact that implementing AI has the potential to cut operating costs in the financial services industry by 22% by 2030, it’s understandable that businesses are looking for ways to incorporate it in the payment workflows. [9]
We'll continue to explore the latest trends in corporate payment as they appear. Make sure to subscribe to our newsletter to stay up to date.
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[1] Using Embedded Payments to Meet B2B Customer Experience Expectations | PaymentsJournal.com
[2] Pulse of Fintech 2023 | KPMG.com
[3] 6 B2B Payments Trends to Digitize Your Business in 2022 | BigCommerce.com
[4] PPRO: Digital payments in Europe forecast to grow by 70% | FintechMagazine.com
[5] Why payments data is the key to unlocking new customer value | EY.com
[6] Global B2B Payments Market Report | ResearchandMarkets.com
[7] 2022 State of Business Procurement | Business.Amazon.com
[8] Value of total cross-border payments market worldwide in 2023 | Statista.com
[9] OECD Business and Finance Outlook | OECD
