Digital payments are changing the global economy.
Thanks to the proliferation of smartphones, modern consumers can buy anything (from anywhere) in seconds. And with the convenience of digital remittances, they can send money to their peers almost instantly.
Despite this empowering trend, B2B digital payments remain largely in the past.
Read on to learn the state of the B2B payments industry, where it’s headed, and how UniTeller is answering the call for modernization.
What Are B2B Digital Payments?
Before we dive into the world of B2B digital payments, it’s important to define our terms.
B2B simply means business-to-business. A B2B payment is an exchange of money for goods or services between two businesses. Such payments do not involve consumers at any point in the transaction.
However, if an exchange occurs between a business and a consumer, it would then be classified as B2C.
If an exchange occurs between two consumers, it would be labeled P2P—peer-to-peer.
B2B payment methods include wire transfers, credit cards, ACH payments, physical checks, and cash payments.
While these methods have long dominated B2B transactions, many organizations are starting to embrace the digital domain.
Current State of B2B Digital Payments
This statistic best describes the state of B2B payments: last year, over 42% of B2B payments were handled via paper check.
It’s true.
And yet, while 80% of all B2B companies prefer to use checks (which were first invented in the 16th century), nearly 90% of consumers prefer digital payments.
This begs the essential question: why are consumers leveraging digital payments while businesses continue to rely on legacy methods?
Though the answer is rather complicated, the solution is surprisingly simple—change is coming fast (and furiously).
Why Are B2B Digital Payments On the Rise?
Every year, B2B payments move enormous sums of money.
In 2022, for example, global B2B payments reached $51 trillion. At the end of 2023, they are expected to exceed $54 trillion.
Goldman Sachs (as reported by Manhattan Venture Research) estimates B2B payments could top $200 trillion by 2028. Considering the volume of payments in recent months, that estimation may prove to be too conservative.
Of course, as the numbers grow, so does the accompanying need for efficiency, reliability, and security.
Until recently, that need had been roundly ignored. Archaic practices, as expensive and sluggish as they may be, have remained firmly in effect.
Physical invoices continue to be the favorite B2B payment method for even the most renowned corporations.
After the pandemic, however, widespread disruption revealed the decay within B2B payments.
Change was no longer an option—it was inevitable.
Payments simply had to become faster, cheaper, and safer. Digitization became the de facto solution—the only path forward for global organizations.
Though many businesses are eager to embrace B2B digital payments, a spectrum of concerns has slowed the revolution and lulled many companies into clinging to the past.
Challenges B2B Digital Payments Face
Countless consumers have enjoyed the convenience of B2C and P2P digital payments.
While businesses are hungry to follow suit, the transition has been bumpy.
Thanks to outdated systems, a fragmented market, and small pockets of skepticism, the adoption of B2B digital payments has been less than immediate.
The clash between the “old” and “new” schools of thought is further heightened by perceived pain points, including:
- Payment delays
- Fraud risk
- High fees
- Compliance concerns
- Supplier payment methods
- Volatile currency pairs
While these seem to be valid concerns, they are ultimately misplaced. Indeed, such pain points are far more applicable to legacy payment methods than the digital realm.
After all, physical invoices are infamously susceptible to lengthy reconciliation times—whether by fraud, delay, or human error. There are too many manual touch-points (and not enough transparency) to consistently guarantee prompt payment.
Paper invoices are also absurdly expensive, costing between $12 to $30 each. Plus, as recent studies affirm, mail theft of checks is rampant nowadays.
Fortunately, digital payments have proven to dramatically reduce fraud, as several hundred chief financial officers (CFOs) recently affirmed.
B2B digital payments are far more than an economic mechanism. They’re a form of security.
While defending businesses, digital payments also have the power to save corporations major sums of money.
In fact, Goldman Sachs (as reported by Digital Transactions) believes B2B digital payments can create a $1.5 trillion uplift in international small business productivity.
Finally, B2B digital payments are uniquely capable of enhancing multilateral efficiencies.
That’s why 62% of businesses believe digital methods can supercharge their B2B payment speed. As more businesses embrace B2B digital payments, that confidence level will skyrocket.
B2B Digital Payments: What the Future Holds
It’s clear that B2B digital payments have reached an inflection point.
Indeed, we have witnessed a dramatic shift in the economy over the last year, as many global organizations incorporate B2B digital payments into their business models.
While transitions can be uncomfortable, they are often the surest path to profitability. The meteoric success of B2C and P2P should serve as a tremendous source of confidence for the future of B2B digital payments.
The changes are happening in real time.
From Mexico to the Philippines, and from Singapore to the United States, countless companies have recently transitioned to electronic invoicing.
This shift is the tip of the iceberg, and with the rise of turnkey solutions, B2B digital payments will soon be pervasive in our global economy.
UniTeller: Modernizing B2B Payments
At UniTeller, we’re thrilled to introduce our proprietary B2B payments solution.
With our customizable, end-to-end technology, businesses are empowered with an efficient and secure way to handle transactions:
- Paying invoices and suppliers
- Paying international service providers
- Buying inventory
- Processing international payroll
Businesses also receive special exchange rate offers, avoid international fees, and process payments in just 1-2 business days.
Better yet, they’re able to say goodbye to outdated systems that cost time and money.
The B2B payments future is bright, the B2B payments future is digital.
Click here to begin your journey with a payment gateway API and digital solutions to streamline B2B, C2B, and B2C cross-border payments.
To learn more about B2B payments with UniTeller’s very own brand, uLink business, click here.
