Payments 2021: Easier, Faster, and Always Changing – Part 2

We don’t need to go on and on about the severe impact of the pandemic on the economy. As one research report summarizes, “The Covid-19 pandemic is a global shock like no other, involving simultaneous disruptions to both supply and demand in an interconnected world economy.” Enough said.

Companies have taken many different financial steps to respond to that global shock, including improved cash management, expanded credit lines, greater debt, and reduced expenditures on goods and services. But one area not mentioned frequently, yet ripe for reform, is payments.

According to PYMNTS.com, the average business spends almost 3 percent of its annual budget on payment-related expenses. They also often wait to be paid longer than they need to. Too much outgo and too slow an inflow: a detrimental combination, though the payments industry is developing solutions to help.

This is the second of a two-part series about the direction we think the payments industry will take in 2021. Last week, we discussed the move to digital payments and continued innovation in the industry. This week, we’re looking at same-day funding and embedded payments – two options that can help with cash flow and reduce costs both today and tomorrow.

More Organizations Take Advantage of Same-Day Funding

Firms can face difficulties when there is a time lag from delivery of goods and services until payments are received. According to the PYMNTS study, 24% of businesses cite long wait times as an issue with day-to day working capital and cash flow management. To speed up receipt of payment funds, more and more organizations will take advantage of new and improved same-day funding solutions.

Same-day funding of payment card transactions allows companies to tap cash flows almost immediately. MerchantE offers Same Day Funding seven days a week, within minutes of closing a batch, directly to the debit card account of the merchant’s choice. That kind of funding availability is a clear benefit to companies in paying invoices and buying supplies, but it also can be helpful to employees. For example, restaurants can access the day’s receipts and pay staff at the end of a shift rather than waiting for a traditional pay day that may be a week or two away.

As for payments speed, various networks such as FedNow will bring real-time payments to companies, but using existing payment networks still remain the easiest path to adoption. Completing B2B disbursements through current push-to-card technology will be embraced more widely (especially as transaction limits are increased). Even with new options coming along, there is still room for tried-and-true legacy technology to facilitate same-day funding.

Embedded Payments Move into the B2B World

Embedded payments have become ubiquitous in the consumer world. Uber, Starbucks, Apple, Amazon – those companies and many others have made payment so frictionless that consumers may hardly remember that they are shelling out for goods and services (until they read their credit card statements, that is).

As companies embrace the digital age and accounts payable and receivable departments collaborate more closely, embedded payment solutions for AP and AR are growing and becoming an integral element of B2B payment processes. MerchantE Invoice, which offers a quick Pay Now button in e-invoices to streamline the payment process, is one such example.

Building invoicing and payments into solutions, rather than choosing software and then adding payment functionality, can reduce decision points and operational complexity. It also can decrease costs. Embedded payments are fast displacing the paper check, which can be expensive and operationally risky — not to mention slow to arrive at their destination. And unlike consumer transactions, embedded payments in B2B are highly transparent, which offers better insight to users.

Advantages Not Just for the Big Guys

At present, streamlined payment solutions are used primarily by larger companies. But the desire for such options is moving downstream, and B2B companies in the small to mid-size market will increasingly demand embedded payment options to reduce costs and improve efficiency and reporting.

Sophisticated payment options and the advantages they offer aren’t just for the big guys any longer. Reducing expenses and accelerating payments are good for the bottom line under any circumstance, let alone during a revenue-squeezing, business-busting pandemic.

MerchantE can help you ensure that your business is set up for scalable growth as more and more consumers—and B2B businesses—shift their behaviors. It’s happening globally.

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