In the past three years, we have seen a massive shift in how businesses accept payments, with many businesses switching from cash to digital and plastic payments. Even though businesses have traditionally been the ones driving consumer payment behaviors, the last few years have seen consumers take on that role, with many limiting physical contact for safer payments. Many businesses are starting to realize how advantageous adopting different payment technologies can be. Below, we explore three trends changing how businesses conduct transactions with other businesses, consumers, and employees.
With digitization making it easier and faster for consumers and businesses to complete transactions, businesses are increasingly expecting their payments to arrive as quickly. This trend has also been elevated by the popularity of near-instantaneous cash transfers between individuals facilitated by the many apps available.
Now, B2B digital payment use cases are increasing, especially as options like same-day ACH payments are rolling out. Businesses that accept ACH payments can receive payments faster and with little friction to their customers, whether consumers or other businesses.
To facilitate these payments and ensure they go smoothly, the National Automated Clearing House Association (Nacha) uses Nacha files that contain instructions for how these transactions are to be handled. These Nacha files have to be formatted correctly and then sent via an ACH processor to kick-start the payment process.
Faster payments can:
- Improve customer experience by allowing businesses to deliver goods and services faster
- Give employees early access to their payments
- Give businesses an edge when negotiating better terms with suppliers
Checks and Cash Are Losing Ground
Offering digital payment options has become critical for attracting and retaining customers. A majority of customers now expect a business to provide digital payment options whether they are shopping in a store or online.
We are also seeing a shift in B2B transactions where checks are losing ground as the preferred form of payment. Apart from the digitization of payments, one trend driving this change is the untenable use of paper in financial management. Digital payments make it much easier for businesses to manage their books while minimizing fraud associated with cash and checks.
Data Presents Various Opportunities
Digital payments create data crucial for understanding customers, their behaviors, and patterns. Businesses can use this data to strengthen customer relationships and engagement while also improving efficiency.
The use of machine learning, artificial intelligence, and data analytics is helping businesses turn the data they collect into insights that provide them with a competitive edge. These insights can also benefit customers as a business can use them to better target customers and provide contextual offers, for example.
Digital payments also make it easier for customers to enter into payment plans. This can happen easily at the point of sale, with these payment plans benefiting customers who would liege large purchases but who would not like credit card debt.
The digitization of payments and payment processing is one of the most significant developments in business in a long time. Businesses that can leverage this trend stand to benefit themselves, whether we are looking at their customer relationships or relationships with other businesses.