Why has corporate payment become so complex?

It's not just you — the corporate payment industry is more complex than ever. 

Sure, we've done away with the piles of papers, but they've been replaced with digital systems and regulated processes that make your company payments that bit more difficult to manage. 

And what about all this payment data? We know that it's a goldmine of potential insights that can translate into savings, but how do we get there?

This is all just scratching the surface: There's a whole host of developments in corporate payment that have contributed to this increased complexity.

As we've witnessed these complexities grow in real-time over the last three decades, we wanted to take a look at what we believe are the biggest contributors to this feeling. 

Let's walk through them.

Digitalization

The global digital payment market is growing at an astonishing rate. The total transaction value of the market more than doubled between 2019 and 2024 — and by 2028, it's expected to be worth $16.59tn, representing a CAGR (Compound Annual Growth Rate) of 9.52% over the next four years. ^[1]

This is a trend we're seeing in corporate payment. And not just in the payment itself, but in the systems, we use to manage and reconcile them.

Digitalization doesn't necessarily make things harder. In fact, it usually does the opposite by making things easier to manage. However, the issue comes when you need to juggle multiple systems and platforms.

This leads to a couple challenges. One, you need to learn the intricacies of each new platform, often requiring training or specialized knowledge to effectively use. Next, is the often-disjointed experience due to a lack of integration between each platform.

In the end, any kind of change is hard. Having to relearn and implement new workflows will almost always lead to issues. But with time comes experience, making things easier in the long run.

Regulations

It goes without saying that regulation is important in the payment industry. But, in business, regulations come from all angles. Some highlights include sustainability, security, and even the data formats we use for reporting. And with each new regulation comes extra work.

A recent survey found that among leading banks and payment service providers in Europe, 63% anticipate upcoming regulations will necessitate modifications or upgrades to their infrastructure. ^[2]

This isn't an easy task either — with so many different topics to keep on top of, it gets difficult to stay ahead of the curve. That same survey found that 70% of respondents are lacking knowledge on the changes they need to make.

This becomes even more difficult for global businesses, which need to contend with differing requirements in each of the markets they operate in.

The result is a slower uptake of innovations as compliance measures need to be taken, widening the gap between consumer and business payments. It also requires a lot of oversight and tracking of payments to meet the reporting requirements outlined in regulations like the CSRD (Corporate Sustainability Reporting Directive) in the EU. This all adds to your workload.

Globalization

Globalization offers many benefits and opportunities for businesses — along with many challenges.

The reality is that each market comes with its own regulations (see above) and nuances that you need to understand. One such nuance is the local payment landscape.

It seems that every country has its own preferences for how to pay, requiring you to partner with local banks, payment processors, and financial institutions to ensure full coverage for your corporate spending needs.

Of course, managing these partnerships and networks adds yet another layer of complexity to your corporate payment ecosystem — and that's before you consider the other hurdles like currency management which often come with the territory.

Another pain point of globalization is dealing with cross border payments. The B2B cross-border payments market is expected to increase by 43%, driven by rising B2B e-commerce spending. ^[3] But these are often inefficient, slow, and fragmented, making them a pain to deal with.

Data management

Payment data is more important than ever. If used correctly, it can unveil all sorts of insights that can be used to increase efficiency, ensure policy compliance, and ultimately save you money. However, not all businesses are utilizing data to its fullest extent.

First, there is the sheer amount of information that needs to be sorted. Data such as transaction details, customer information, and payment histories, can become overwhelming — especially at scale. It doesn't help that this data is often scattered across platforms and formats.

Then it's a case of figuring out how best to use it. It takes a particular set of skills and knowledge of specialized software to make actionable insights from any data you collect. Dedicated data experts are expensive — as is the software they use — so many businesses overlook this need.

With so many challenges, it's no wonder that less than half (44%) of data and analytics leaders say their teams are effective in providing value to their organization, revealing the large gap in effective data usage. ^[4]

Ultimately, businesses are lacking the structure and knowledge needed to make sense of this data, leading to clunky processes, and missed opportunities.

Innovation

People are always on the lookout for faster, easier, and more seamless ways to pay.

Even businesses are expecting new innovations in the way they make payments, with their experiences in their day-to-day consumer payments increasing desire for simpler solutions in their work life.

Delivering such innovations in a business setting is difficult. That's because there's a lot more that needs to be considered, including:

Security: This is an obvious one. The security of new payment methods will be under a lot of scrutiny to ensure it doesn't pose any risk.

Regulation compliance: Another big one, as many regulations have standardized data, security, and reporting requirements that need to be fulfilled.

Compatibility with existing systems: If a payment solution is not compatible with existing financial software currently in use, it would take a lot of time, money, and effort to implement it.

Cost of implementation: Both the cost of the initial set up and any potential transaction fees need to be considered — is it really worth the investment?

Ease of use: Finally, will this new payment method require any sort of training or specialized ongoing support?

So, there are increasing demands for new payment innovations, but ability to implement them can't keep up — that's a recipe for disaster.

Sound familiar? 

The payment industry has always been dynamic, and as it becomes more digital, global, interconnected, and innovative, this is only going to continue.

Today, payments are no longer just a process, but an integral part of your growth and efficiency strategy.

As with any strategy, it takes time, data, and expertise to succeed. This is why many turn to a specialist payment provider to help them master this complexity, and free up time for what matters to them.

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Banner photo by Tropical studio on AdobeStock

^[1] Digital Payments - Worldwide | Statista

^[2] How European banks compare on readiness for EU payments regulations | EY

^[3] Value of total cross-border payments market worldwide in 2023, with a forecast for 2030 | Statista

^[4] Why data leaders struggle to produce strategic results | CIO