Digital Payments

Business Benefits of Integrated Digital Payments and Why they are Preferred over Traditional Payment Methods

Digital Payments

Business Benefits of Integrated Digital Payments and Why they are Preferred over Traditional Payment Methods

Table of Contents

The impact of Covid-19 has dramatically hastened the migration to digital payments, with a sense of urgency not seen before across the B2B environment, from mid-market businesses to major global organizations.

Companies with on-premise legacy payment systems were stranded in locked buildings, and paper checks piled up in office inboxes across the country, as the epidemic disrupted business as usual and compelled enormous numbers of staff to work remotely.

All of this happened at a time when working capital was in short supply to keep firms afloat, and both suppliers and buyers realized they couldn’t effectively access or reconcile payments without the correct digital tools. Furthermore, the overall amount of B2B transactions is increasing: B2B payments in the United States was predicted to increase from $16.5 trillion in 2014 to $20.1 trillion in 2020, according to Deloitte.

Although many organizations may have desired or planned to integrate digital payments, the truth is that there was no compelling incentive for them to do so until lately. Even though check use has practically died in Europe, around 51% of small businesses and over 56% of major businesses in the United States continued to take checks. Companies typically struggled with a jumble of inefficient B2B payment methods, platforms, and solutions that were riddled with manual processes and fragmented systems.

The pandemic, on the other hand, transformed everything in an instant. Many businesses found they didn’t have the visibility, flexibility, or agility they required to adapt to the new remote, work-from-home model. Companies were forced to adopt a digital payments transformation swiftly and urgently since no one was travelling to the office to physically collect checks or reconcile payments.

Top Business Benefits of Digital Payments include:

  1. Mobile payments are more convenient and allow for quicker transactions.

Using NFC technology, one of the key advantages of mobile payment is that it simplifies and speeds up the in-store payment process for you and your customers. When the terminal and the mobile phone are close enough, they can communicate wirelessly. By keeping their numerous bank cards in their digital wallets, your customers may simplify the management of their various bank cards.

Payments may now be made instantly with their mobile phone, eliminating the need for them to dig through their pockets for their wallet. Buyers on an e-commerce site also benefit from the speed and convenience of mobile transactions.

  1. Mobile Payments Require Little Capital

Accepting mobile payments in-store usually only necessitates a minor outlay. All you have to do now is make sure your terminal supports NFC technology and the cards you want to use, as well as that your payment solutions provider accepts this technology. Some software updates may be required, but the entire procedure is rather simple.

Accepting payments using a mobile wallet is the same as accepting payments with a regular card; there are no additional costs to pay. Existing solutions and transaction costs, however, apply. You’ll need to budget for development expenditures if you want to accept mobile payments on your e-commerce site.

  1. Digital payments give businesses a competitive advantage.

Small businesses that take mobile payments are establishing a more streamlined and effective payment procedure as mobile payments become increasingly prevalent. As a result, they will be in a better position to compete with their larger competitors. The digital landscape is rapidly evolving, and mobile payments enable small businesses to adapt and keep in touch with their customers and competition.

This payment solution may be advantageous to any type of business, whether you’re accepting payments or incorporating mobile payments into your growth strategy.

  1. Simple integration with merchant’s website/e-commerce store

Many competing information technology (IT) priorities exist in businesses. They continue to use a limited number of IT resources across many initiatives. For many businesses, integrating a digital payment service and making it available as a payment option on a website is a long-term IT project.

As a result, they’re on the lookout for a digital payment solution that can provide a seamless integration experience. If a company has built their website on an eCommerce solution provider’s platform (such as Shopify, Magento, or BigCommerce), they want the digital payment service to interface easily with that solution provider for a plug-and-play payment solution.

If a company has its own personalized website, the digital payment service is responsible for providing the necessary technologies and expertise to ensure seamless personalized integration.

Some of the operational benefits include:

  • Cost-cutting and time-saving. By eliminating labor-intensive manual operations, a contemporary, automated system can reduce the cost and time spent on invoice processing.
  • Transactions that are safe. Supplier management, treasury systems, and payment files can all be monitored more effectively with integrated digital payments solutions.
  • Improved visibility. The most recent payment management solutions are designed to meet the demand for cash visibility and financial operational agility.
  • Efficiency and accuracy have improved. Staff spend less time on manual payment-related duties with a modern B2B payments solution, making them more productive and less prone to errors.

Digital Payments vs Paper Checks

Paper-based payments are inconvenient for both businesses and their customers. Among a slew of drawbacks, collecting and processing paper checks is a prohibitively expensive task for most firms, costing anywhere from $4 to $20 per check.

They are not only costly, but they also take around 15 days to clear. When you factor in mail float, errors, and other delays, it’s easy to spend a month waiting for payment, which hinders cash flow.

This payment mechanism is, in fact, quite inefficient.

  • Paper-based payments slow down the payment process and cause delays on a regular basis.
  • Businesses and their consumers are more vulnerable to fraud when they use checks.
  • Reconciliation takes too long and is prone to errors.
  • There’s no guarantee that a check is linked to a sufficient-funds account.
  • Customers can put a stop payment on their account or close it during the wait period.
  • Because remote capture isn’t available, customers have to travel to the bank.
  • It’s difficult to keep track of incoming checks or predict when they’ll arrive.

Accepting paper checks has become increasingly challenging for businesses amid lockdowns and unexpected crises, if that wasn’t enough. There is no one in the office to collect and reconcile paper checks that arrive by mail for businesses that operate remotely. With cross-border payments, this becomes considerably more complicated.

When you consider that the average B2B payment cycle takes 35 days to complete and that 47% of invoices are paid late, it’s evident that businesses will constantly be trapped in inefficiencies unless they move beyond paper-based payments.

Electronic payments, on the other hand, provide the polar opposite experience. The amount of time and money it takes to process cashless payments decreases drastically, often by as much as 60% or more. B2B payment systems that are digital are also safer, easier to collect, and fully automated. The best part is that when you collect payments digitally, the money goes directly into your business’ account with little to no delay and at a fraction of the cost. Payment speed is about the same whether you’re dealing with a consumer down the street or a vendor on the other side of the world.

Conclusion:

Many businesses, including legal companies, insurance, and construction companies, still rely heavily on paper checks for payment. These firms may better manage their accounts receivable process by eliminating paper-based payments resulting in speedier payment cycles and more efficient collections.

Digital transactions are becoming more popular, owing to the need to make operations more efficient, remote, and secure for everyone. While some organizations choose to preserve traditional payments in their catalogue, this may result in more expensive and inflexible transactions in the long term.

Several sectors have turned to digital, contactless payments as a means of stabilizing revenue and expanding their business after 2020. This is most likely attributable to the fact that 87 percent of clients now prefer to pay using a digital device. It’s more convenient, faster, and safer.

We’ve already seen some of the advantages that digital payments have brought to businesses. It’s simple to see why more businesses are opting for integrated digital payments systems, with payment options for every requirement. New technologies are being developed all the time to meet the growing need for a speedier payment system.

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