A new decade is upon us, and the payments landscape is changing FAST. Here are our 3 payment trends to look out for in 2020.
Shifting focus from P2P to B2B
Peer-to-peer (P2P) payment services have become increasingly popular, especially in the U.S., as companies like Zelle and Venmo have become household names. However, while the last few years have seen many new innovative options become available to consumers, very few innovative solutions have come to market for business-to-business (B2B) payments…until now.
B2B payments involve complex, manual processes, where paper checks still account for roughly half of all corporate transactions. Organizations, both large and small, are actively looking for digital, account-to-account payment options, and payment technology companies capable of offering flexible, functional solutions will be able to capture a market many times larger than P2P payments.
Real-time in no-time
Payments will not just become increasingly digital, they will become faster! The idea of a real-time payment, once a myth, is slowly becoming a reality. Canada and the U.S. have yet to implement said systems, but the U.S is taking significant steps towards a faster payments system, while Canada has begun discussing the path towards modernizing its payment rail. Approximately ¼ of the world’s countries have already, or are currently implementing a faster payment ecosystem, and this will undoubtedly become the new reality.
While real-time payments have yet to come to fruition in North America, payment providers who are prepared will stand to reap the benefits of this digital transformation. As one article states, “solution providers stand to gain from an evolution-not-revolution approach to adoption…” and this evolution has officially begun.
Cash is no longer king
While cash may be accepted (almost) everywhere, it’s now clear that consumers prefer digital payment options. In Canada, small businesses now do fewer than 25% of their transactions in cash, and that number is decreasing fast. Cash still has its place, but consumers have made it clear that the best payment experience is no experience at all. Services like Amazon and Uber have made it as simple and painless as possible to pay, while credit cards have mostly moved to contactless payments. The adoption of digital wallets has been slower in North America than the rest of the world, but adoption rates are steadily increasing. Finally, businesses, especially small businesses that have less access to alternatives, have begun demanding new options. In fact:
- More than 80% of small businesses want more payment options
- 61% of businesses surveyed would move away from cash, if they had other options
- 67% would be willing to move away from checks, if they had other options
So 3 things have become very clear:
1) Both consumers and businesses want digital payment options. Cash still has its place, but this is a digital era and payments must evolve to match other industries.
2) It’s only a matter of time before real-time payments are achieved. Both Canada and the U.S. are not there yet, but some payment providers, including Ablii, are ready.
3) Business-to-business payments are lagging behind, with paper checks forcing businesses to spend far too much time and money on payables/receivables and reconciliation.
Check back in later this year to see if anything has changed!