Consumers are adopting peer-to-peer FinTech technologies in their everyday lives, from electronic wallet solutions to mobile money transfers. Online payments in e-commerce no longer faze consumers, with the total global market for e-commerce projected to surpass $2.4 trillion this year, for approximately 10% of the global retail market.
Global P2P payments were projected to reach $540 billion in 2017 in mobile payments alone. With such a huge market opportunity, it is not surprising to see so that over 1,000 FinTech companies are active in payment technology development.
While the P2P and C2B (Consumer to business) payment market is undoubtedly a huge opportunity, FinTech companies have begun targeting a much larger opportunity, namely the B2B market. The B2B cross-border payment market alone is valued at over $150 trillion, over 60 times the e-commerce market, creating a lucrative market opportunity for FinTech companies.
Traditional B2B Payments Suffer from Numerous Limitations
Traditionally B2B (Business to Business) payments are a complex and time-consuming process, fraught with high levels of bureaucracy and manual reporting. Payment, or payment receipt via check, requires the issuing of the check, deposit, monitoring the clearance of the check, and manual update of payment management systems. Checks also involve float times which affect cash flow, as well as a certain degree of security risk.
FinTech Innovations Answer Business Payment Challenges
Focused on the development of secure and easy-to-execute payment methods, FinTech companies offer a number of solutions which will likely impact the B2B payments market in the coming years. Traditional banks and financial institutions are increasingly partnering with FinTech companies in order to maintain their market share within the B2B sector. The following is a brief overview of some of these technologies and the implications for B2B payments:
Blockchain is a highly secure P2P network of transactions. Each blockchain is typically associated with a cryptocurrency, though in theory, this technology can be used to trade in anything of value. Transactions executed over this platform create a real-time record, called a “block,” in the public distributed ledger, which is added to the “chain” and shared with thousands of computers in the network, ensuring security.
Payment Processing and Management Platforms
Focused on B2B and B2C (Business to customer) payment management, these processing platforms provide businesses with a powerful tool for managing their outgoing and incoming payments – all from within one central platform.
E-invoicing platforms are central management systems for invoicing and approving payment processes. Streamlining the payment process, and moving a formerly manual and paper-based procedure to an online one, e-invoicing accelerates processes and reduces operating costs. This electronic platform enables companies to easily access specific transactions, as opposed to physically identifying paper invoices in a pile of receipts – clearly an advantage in today’s electronic age.
Mobile B2B Payment Solutions
As mobile payments such as e-wallets and mPOS payment explode in B2C, it is not surprising that executives would like to experience this same ease of payment within the corporate environment.