Bankless Times welcomes Ben Barlow to our network of contributors. Based in the United Kingdom, Mr. Barlow will provide a fresh look at fintech across the pond.
There is a large gap between bank to consumer (B2C) and bank to bank (B2B) payments in the UK and Europe. Consumer payments are streaks ahead when it comes to the technology used and the speed and variation of payment methods available. It is always the B2C payments that are grabbing the headlines with new, unique innovations. However, business-to-business transfers are finally beginning to make headway and catch up with their B2C counterparts.
B2C Leads the Way
There have been many new and exciting consumer payment methods cropping up to make the process a lot quicker, more flexible and agile. In general, it can take around three days to process a lot of B2B transfers, while consumer payments can sometimes be done in seconds through innovative ways. These include:
- Contactless cards: There are around 104.4 million contactless cards in circulation in the UK (as of January 2017)
- Mobile payments: Consumer spending via smartphone devices has increased, due to its speed and simplicity
- Wearable technology: The latest trend, more and more consumers are making transactions through smart watches, bracelets and more.
A lot of the businesses pushing the B2C payments market have been technology companies, start-ups and new entrants. Consumers have benefitted from faster payment methods and cheaper costs, and now some of these fintech firms are moving into the B2B space. There are many opportunities, with non-banks meeting the demands of lower costs and better efficiency in the Business-to-Business transfer market.
However, in order for it to be fully successful, there is a requirement for collaboration between fintech firms and banks. Access for fintech companies to existing payment infrastructure to test their innovations and improve it is needed. As this is different to the B2C market, what works for one may not for the other. Plus, working together should benefit both sides, improving Business-to-Business transfers while allowing fintech to experiment.
Fintech has already proved that collaboration can be successful in other industries. For example, in the forex trade there are countless online trading platforms available, such as with ETX Capital. Many have been developed between brokers and fintech companies.
Fraud and Regulation
Fraud is still a big issue for the B2B industry, with paper checks still in place. A change to virtual cards and improved fraud protection could reduce B2B payment fraud. However, the likes of cybercrime and email scams look likely to remain prevalent, with further fintech innovations working to cut them out.
Regulation could also impact upon fintech and B2B payments. All methods of payments are intended to be safeguarded by ongoing regulation. Yet some believe this could disrupt innovation in the Business-to-Business sector. Especially if legislation and regulation continues to take an age to be pushed through, this could cut back on its catch-up with B2C.
Future of B2B Payments
Business-to-Business payments are set to grow in the next few years, as long as collaborations are successful and there are no lengthy disruptions. The likes of Brexit and other uncertainties in the financial markets could also hold things back. On the whole though, B2B payment innovations will make things much quicker and more efficient for businesses, while catching up with the B2C sector.
It may have been a slow start, but it appears that fintech firms are on board to help B2B transfers catch up with B2C in the next few years.