We live in a world on the brink of complete digitization. Although many businesses still accept checks or cash, banks are innovating with LVTS and ACSS and leaving behind these dated payment methods. If current innovation is any indication, we may soon see a future with no checks or cash at all.
This change is more apparent than in business-to-business payments in the B2B bank sector. Businesses have long relied on checks to transact business, but that iceberg is melting. Fortunately, B2B innovations will more than make up for the rocky patches of this digital transition.
In this article, we will discuss how these B2B changes are going to impact the industry for the better.
A Slow Transition
The good news is that companies are transitioning. The adoption of modern, digital payments and platforms only continues to accelerate with every passing year.
Unfortunately, many businesses continue to do things the old-fashioned way. According to recent statistics, business-to-business payments still use checks 40% of the time. Despite digital payment platforms being the norm, almost half of B2B payments still happen on paper.
Needless to say, the trend is in favor of the digital. We will likely see over 90% of all payments through digital means in the next decade. Further, there is a high likelihood that financial institutions will deprecate checks entirely in the near future.
The Problem With Checks in a B2B Bank
Checks and cash have been the standard payment methods for well over 100 years in Canada. In times past, they were perfectly fine for transacting between businesses. But in the modern age, with modern technology, they have a bevy of security and convenience limitations.
Let’s discuss how the transition to digital security standards is better in a world that runs on physical payment mediums.
Reduces Financial Fraud
Financial fraud is a massive issue that authorities have struggled with year after year in Canada. In fact, the previous year experienced historic levels of fraud losses. Granted, some of this fraud is by digital means, but a good chunk of it is thanks to counterfeit cash and checks.
Unfortunately, it is quite easy to counterfeit checks and cash. Modern printers are more than capable of printing convincing cash and check substitutes that fool even the best bank security. By the time anyone realizes that fraud has occurred, criminals have siphoned their money out.
Counterfeiters have a considerable amount of resources both with the Internet and with shipping. They can purchase all the ingredients they need to fabricate legal tender online. Better yet, they can deliver it straight to their doorstep.
The conversion to digital gives fraudsters less means to commit their crimes. Committing digital fraud takes a much greater level of expertise, and is much more difficult to pull off—and at a higher cost. Modern business payment innovations are able to automatically detect fraud, rather than relying on a human that can be fooled.
It’s More Convenient
Let’s be honest here, checks are the least convenient method of payment. It requires purchasing and shipping paper checks, writing them out by hand–or printing them–and then submitting them.
Verification times are significantly slower. Even with digital scanners that can read human writing, these machines may fail. When a business has to set up an appointment with the teller to resolve issues, that is wasted time and money.
Processing times for checks are much, much longer. Sometimes, it can take several days before a check clears. When some businesses are working on a shoestring budget, this can easily push you over the edge into debt.
On the other hand, digital payment systems are lightning-fast. Pending transactions will take a day or two to process; that much is true. But using this payment method is quicker, easier, and more convenient.
Innovations in B2B payment systems allow businesses to process accounts receivable and accounts payable much faster. It even allows for B2B innovations like modern payment platforms and third-party payment processors.
It’s More Secure
Digital security is far superior for business-to-business payments. For starters, you are not relying on printed patterns or ciphers. You rely instead on modern encryption standards and efficient open API systems.
As we stated before, it requires an entirely different level of expertise to hack these systems. To be clear, digital systems are not impervious. But they are miles more secure than previous methods.
Businesses need to be able to rest assured that their digital funds and transactions are safe and secure. They need more granular control over them, too. It’s much more reassuring when you can handle everyday tasks and issues from a computer app rather than calling customer service for every sultry issue.
It Reduces Overhead Costs and Improves Efficiency
There’s no getting around it: checks are slow and efficient. They require additional manpower, which translates to higher overhead costs.
B2B payments by digital means translate to better efficiency and savings for businesses. They make transactions smoother and keep employees focused on what really matters.
What Is the Way Forward?
It’s impossible to say what the future will hold. At the very least, it is safe to suggest that it will be almost entirely based on digital platforms and standards. Business payment innovations will likely continue to provide newer, more effective ways to handle funds.
We are likely to see a rise in digital lending, banking as a service, digital credit risk monitoring, and more. Expect a future driven by AI analytics and sophisticated authentication methods. Businesses will slowly begin to adopt FinTech services and perhaps even blockchain-enabled funding.
Verify With Inverite
The B2B bank sphere is one of constant innovation and advancement toward digital solutions. The iceberg that is checks have begun to melt, and B2B innovations are pushing for entirely digital platforms.
It’s hard to say where the future will lead. But current innovations have already made payments more secure and more convenient.
Inverite is your source for bank and ID verification–and much more. Book a demo today and see the change it affects in your process.