- For this series on payments predictions for the coming year, Tearsheet asked over 20 experts to share insights on upcoming payments trends in 2022.
- Key topics covered include B2B payments, cross-border money transfers, embedded finance, on-demand pay, virtual cards, stablecoins, digital wallets, P2P payments, and more.
This is the second part of a three-part series on the most important upcoming trends in payments.
Part 1 covers embedded finance, cross-border payments and on-demand pay.
Part 2 looks at the digitization of B2B payments, the growth of stablecoins, and the virtual card boom.
part 3 explores digital wallets, P2P payments, and cybersecurity. For more updates on all things payments, subscribe to our Payments newsletter here.
The payments industry has experienced some major shifts this year, catapulted by the pandemic-induced move towards digitization. With 2022 almost here, we asked 22 experts from across the payments spectrum to predict what trends we can expect from the industry in the coming year.
A number of themes stood out as particularly relevant for 2022. Here’s what the experts say you should look out for as we head into the new year.
Digitization of B2B payments
Making it as easy as possible for businesses to send and receive payments digitally will be key to small business success in 2022. A recent Wave report found that over one in five (21.5%) invoices sent by US microbusiness owners were overdue. However, invoices sent with embedded digital payment options were paid on time 15% more frequently.
“To come out on top in 2022, small businesses should consider how to make receiving payments for services as easy and seamless as possible. Embedding payments onto digital invoices not only helps business owners get paid faster, but also brings other advantages: coupling invoices with payment history makes cash flow tracking significantly easier, and saves countless headaches come tax time.”
– David Axler, vp/gm – banking and books at Wave
“Digital B2B payments are accelerating rapidly, with a need to make them as simple, secure and effortless as consumer payments are today. For the next year, we expect more innovation and investment in consumerizing B2B payments, modernizing infrastructures, and removing friction to make global money movement increasingly digital and effortless in business settings.”
– Gloria Colgan, svp and global head of product, Visa Business Solutions
“The US B2B payments sector is a must watch in 2022, totaling over $25 trillion annually. Yet, with approximately 50% of transactions still involving paper checks, it is one of the last untapped markets in electronic payments with a high degree of fragmentation and manual processes for payment and reconciliation. The key to unlocking value across this landscape is digitizing data, automation and improving the payment experience.”
– Rob Anderson, partner at FTV Capital
“The industry has long focused on the buyer and automation for buyers. While there will be continued adoption of technology on the buyer side to automate financial operations, there will also be a rise in receivables and supplier automation. We can expect a growth in the trend to offer suppliers flexibility to accept fee-based payment types. We will also see the rise of AP & AR convergence, where a business can be both a buyer and a supplier and should be able to leverage one solution for automating both AP and AR.”
– Gunita Bindra, vp product management & partnerships at Bottomline Technologies
“Paper checks will continue to go the way of the VHS cassette tape when it comes to B2B payments. While 97% of organizations still use checks to make at least some payments to major business suppliers, the number of paper payments has been dropping rapidly in recent years. Studies have shown that fewer than half of B2B payments are now being made by check – a trend that will continue to pick up momentum in 2022 and beyond as digital payments are cheaper and more convenient, can reduce back-office functions, and are more secure.
Enterprise and mid-market companies will continue to demand more secure solutions for B2B payments as the fight against fraud rages on in 2022. Just two years ago, 74% of companies stated that paper check payments were the subject of fraud. The next closest payment method was wire transfers at 40%. By digitizing B2B payments, and replacing paper checks and wire transfers – both of which use old stack technology – companies are able to drastically reduce their exposure to fraud.”
– Tom Romary, co-founder and chief commercial officer at CoreChain Technologies
“With supply chain delays, SMBs are having to wait longer to get paid for what they produce. This puts additional cash flow stresses on businesses, given that costs continue to increase and the average small business has less than 30 days of operating cash on hand.
In 2022, smaller businesses will continue to look for ways to accelerate payment cycles. They’ll have to, because most banks aren’t increasing lending or credit facilities.
Inflation is also serving as a catalyst to accelerate payments between suppliers and buyers. Getting paid a week or two faster means avoiding the risk of raw materials jumping 10% or 20% in price, which happened in many industries in 2021.
This year alone, we’ve overseen tens of billions of dollars in accelerated payments between large corporates and their suppliers, which are generally SMBs. That’s tens of billions of dollars that small businesses didn’t have to approach banks for – and, in all likelihood, money that these lenders would have been hesitant to provide.”
– Chris Atkins, svp capital finance at C2FO
The growth of stablecoins and blockchain-based payments
The use of blockchain technology in payments is expected to accelerate in the coming year, with new blockchain-based platforms offering quicker, safer, and cheaper transactions through decentralized ledgers.
“Distributed ledger-based payment platforms will bring much-needed innovation that is required for global financial inclusion. They will make the incumbents rethink and re-engineer the existing legacy payment platforms, just like Tesla pushed the entire auto industry into producing EVs.
These new distributed ledger technologies will be more secure, will settle faster with limited global restrictions, and will be a lot cheaper than existing traditional credit card and wire transfer systems. Additionally, these new technologies will also open up new innovations like stablecoins and micropayments.
We believe stablecoins will continue to gain popularity, although we do expect increased regulation around them. Stablecoins will reduce friction while removing price volatility for a wide variety of use cases. Think of them like a Disney pass – you have a little bit of friction at the onramp and offramp, but anywhere inside the park, payments are fast, efficient, and seamless. And we think both the real world and the metaverse are moving towards the park model.”
– Sushil Prabhu, CEO of Dropp
“A major trend for B2B organizations in 2022 will be demanding payouts from their processors in stablecoins – seizing the savings on offer and passing them on to consumers. This is particularly for businesses making and receiving international payments, where transaction costs are highest, and where everyone is currently being forced to overpay.
Stablecoins merge the price stability of fiat currency with the borderless benefits of cryptocurrency, all while removing rent-seekers that charge a flat fee plus up to 3% on each transaction. If you’re a business that processes payments internationally, you need to stop overpaying international payout and accept stablecoins. Savings on payout costs will be at least 50%.”
– Ran Goldi, CEO of First DAG
“In 2022, we’ll see a rise in the number of companies looking to bridge the worlds of fiat and blockchain. More and more traditional players are starting to see the value for blockchain to provide a fast, affordable, and transparent method for payments — especially for B2B cross-border payments and remittances. The groundwork has been laid for partnerships between the traditional payments providers and forward-thinking blockchain technology companies to create payments solutions that reduce the friction in our current financial system.”
– Denelle Dixon, CEO and executive director of Stellar Development Foundation
The virtual card boom
Virtual cards will likely experience a boom as a means of payment in 2022 and beyond.
“With a plethora of digital payment alternatives out there, consumers want a more convenient, safe, and quicker way to use their money. Not only are virtual credit cards environmentally friendly, but they also give consumers peace of mind by shielding their personal information from fraudsters while shopping online. In addition, consumers can set specific spending limits and expiration dates on virtual credit cards, while also giving them the option to activate or cancel their card instantaneously. As banks continue to expand their digital offerings and look to provide a safer and more sustainable option for customers, we predict that consumers will welcome the virtual credit card with open arms in 2022.”
– Jeff Kump, head of payments at CSG Forte
“In the next 5 years, the global value of virtual card transactions is expected to increase by 370%, rising from $1.9 trillion in 2021 to $6.8 trillion in 2026. This growth will largely be driven by B2B payments, which will make up around 70% of the total value of virtual card transactions by 2026.”
– Gunita Bindra, vp product management & partnerships at Bottomline Technologies
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