How the COVID-19 pandemic has fueled the adoption of digital payments
- 07.13.2020, 07:23 AM
Over the past six months, the COVID-19 pandemic has heavily influenced the way businesses interact with each other. We have seen online solutions to physical problems skyrocket across sectors. Technology-driven and integrated payment systems are an integral part of this macro digital revolution.
In the consumer world digital payment options, championed by consumer electronic leaders like Samsung, Apple and Google, have steadily gained traction since the inception of contactless technology in late 2014.
When purchasing coffee at a local cafe, it is not uncommon for a customer to wave their smartphone or wearable across a point-of-sale terminal without thinking twice about the entire experience — funds flow uninterrupted in a matter of seconds between the customer and the business. Before these more recent NFC and MST developments, digital payments have existed for consumers for decades via ecommerce shopping experiences. Even peer-to-peer network models have surged in popularity since Venmo’s initial release in 2011.Fintech News
However, the mainstream adoption of this connected interaction between buyers and sellers has been strikingly absent from the business-to-business (B2B) money transfer ecosystem. Until recently, digital payments have long been a supporting character to more familiar, traditional and ordinary methods — namely domestic ACH in the United States and international bank wire.
The pandemic didn’t necessarily spur massive innovation and change in the context of business payments, but rather revealed and accelerated the popularity of digital solutions that savvy, early-adopters have been using to their advantage for the past 10 years. While others are catching up, simple, secure and transparent payment options, like the Veem payment network, are empowering business owners to maintain their financial processes in distributed work environments.
Transparent transactions combined with robust integrated financial processes and the mainstreaming of digital currencies will be major contributing factors to shape B2B payments in a post-COVID economy.
Getting from A to B
Financial technology firms are rapidly introducing new avenues for businesses to pay and get paid. In developing new solutions, we, at Veem, have found that virtual business payments actually bring partners closer together.
Network models applied to any industry inherently bring transparency to the forefront. For example, Uber and Lyft introduced a digital solution to their industry and in doing so built a key competitive advantage that sets them apart from traditional taxi services — a mobile app that brings more certainty to the ride hailing experience for both passengers and drivers.
Digital business payment providers improved on traditional methods by incorporating features like real-time communication, two-sided tracking and upfront pricing into the user experience. These familiar and valuable features have supported and will continue to reinforce the adoption and development of remote business payment solutions.
Integrated financial processes
Digital business payments are further enhanced by the integration of data and accounting systems. Accounting applications like Intuit’s Quickbooks, Oracle’s NetSuite and Xero layered with workflow automation tools like Zapier make sharing data and information — like invoices, contracts and purpose of payment details — an easy task.
This harmony between business applications simplifies payment reconciliation for senders and receivers.
In contrast, fragmented processes see payment and accounting systems as separate domains that require manual integration by both parties on either end of the transaction. Integrated financial processes fueled by technology ensure business owners never have to step inside of a bank or cash a physical check again if they don’t want to.
Digital currencies on deck
Federal governments have recently brought a heightened level of legitimacy to the implementation of digital currencies in day-to-day transactions. The 2020 World Economic Forum saw advocacy, interest and consideration for Central Bank issued Digital Currencies (CBDC) from major economies including Japan, South Korea, Hong Kong, UK, Switzerland, Germany, Sweden, Norway, Netherlands, Uruguay, Bahamas, China, Israel, Thailand, and Canada.
The benefits and opportunities in leveraging blockchain for business payments are vast. Bridging the gap between fiat and cryptocurrencies provides business owners with more options — improving the speed and cost associated with sending and receiving payments domestically and internationally. Blockchain technology will further strengthen business payments by introducing genuine tamper-proof security infrastructure to our financial processes, ultimately providing more value to end-users.
The fire that fuels
The COVID-19 pandemic created two contrasting worlds that, like fire, either fueled or destroyed industries. Those businesses and industries that relied on in-person interactions struggled to maintain revenue, while digital solutions thrived.
While contactless payments, in the consumer context, and digital payment options for businesses saw steady upward growth in recent years, the pandemic acted as a catalyst for these solutions to rapidly take off.
Over the past six months, COVID-19 laid the foundation for payment providers to capitalize on an opportunity to not only grow but to extend genuine real-time value to businesses who needed to pivot and adjust quickly to the new conditions.
Location: Mission Viejo, California, United States