Checks, Cards, Cross-Borders: Key B2B Payment Trends in 2024

Picture this: 2024, a realm where the intricacies of cross-border payments unravel, and B2B enterprises forge ahead in the digital revolution. Our journey begins with numbers that paint a compelling narrative.

Amid the symphony of real-time payments, virtual cards, and cryptographic currencies, B2B businesses, once cautious observers, now stand at the forefront of change. Join us as we dive into earnings calls, decipher market reports, and unveil the captivating tale of the top four B2B payment industry trends destined to shape 2024. The stage is set, the curtain rises - let the story unfold.

What’s the B2B Payment Market Size?

Before we jump into the trends, here’s a look at the B2B payment market size.

The B2B Payments space is expected to grow at a CAGR of 10.1% between 2022-2030, reaching $2,146.70 billion in 2030. Key factors driving this B2B payments growth are:

• The rapid expansion of global trade led by increased export and import of goods and services
• Increased digitization and automation of the B2B payment system, thus improving the ease of completing transactions
• Government initiatives like FedNow to streamline and enhance B2B payment mechanisms

B2B Payment Trends 2024

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Some initiatives being taken to simplify and expedite cross-border payments include:

• Collaborative partnerships: Card companies, payment processors banks are partnering to offer seamless cross-border transaction experiences. Visa has partnered with Citi Bank and IBM to expand their value-added service in 60+ countries.
• AI and other technology advancements: The use of ISO 20022 standards and AI will help bring real-time data into the payment systems, thus helping eliminate delays and friction in cross-border payments.

2.The increased use of virtual cards

As B2B payments try to emulate B2C payment ways, virtual card usage is likely to grow. Virtual cards provide a similar experience akin to using prepaid cards but come with increased security and control features for corporate entities.

Business leaders can allot virtual cards to various teams to enable easier and faster spending while still being able to track and control where money is being used. The use of virtual cards in the B2B increased during the pandemic years and has since seen a surge.

Here are some steps card issuers and banks are taking to expand their virtual card offerings.

• MasterCard is enhancing its virtual card technology to make it easier for all suppliers to accept virtual card payments. It has partnered with Billtrust for this.
• Visa signed a multi-year agreement with WEX to enable their travel, health and corporate clients to make payments using Visa’s virtual card capabilities.
• American Express is partnering with Extend and Google to improve the security features and effectiveness of its virtual cards.

Virtual cards are increasingly preferred by businesses for travel, supplier payments, and entertainment purposes. Virtual cards for B2B payment processes help enhance cash flow, boost security, and simplify accounts payable (AP) automation. They also help meet sustainability goals as they help cut carbon emissions associated with transactions by up to 80%.

3.The death of checks?

Check usage for B2B payments will continue to decline through 2024. Some bold economists even predict that checks will be obsolete by 2024.

While checks may not be fully put to disuse, more and more businesses are likely to embrace digital b2b payment trends. As the simplicity, speed, and security of digital payments improve and businesses become more confident in shifting to paperless workflows, the usage of checks will rapidly decline and touch low, likely in 2-3 years.

Here’s a graph that tracks B2B check payment usage from 2004 – 2022. On average, check usage has dropped by 8% every three years. The drop is likely to get sharper as more payment options open up for businesses.

4. FedNow to catalyze B2B payment innovations

The launch of FedNow, the real-time payment service by the Federal Reserve, has not only increased the number of options available for instant payments but also opened up the possibility of the development of new payment services on top of it.

FedNow allows banks and other financial institutions to build products using the FedNow platform. At least, some of these innovations would be directed at making B2B payments smoother and more safe.

The first to innovate on the FedNow platform was payments API provider Orum. It has built a new product, Verify, to instantly verify bank accounts, before initiating a payment transfer.

Many more such innovations based on the FedNow platform are expected in 2024.

Conclusion: Towards convergence in UX

While we have focused on four important B2B payment trends for 2024, several other developments are also anticipated. Some of these include:

• The increased use of AI and ML in B2B payments: AI and ML will increasingly be used to study payment transactions, prevent fraud, and enable data-driven payment decisions.
• Better UX for B2B payments:User experience (UX) will impact how quickly new B2B payment services get adopted. With corporate purchasers demanding the same level of ease and simplicity they experience in personal purchases, the payment UX will be a distinguishing factor for B2B in 2024 and beyond.
• Industry-specific payment solutions: New-age, specialized payment service providers like Shift4 and Global Payments are offering payment solutions tailored to different industries such as entertainment, retail, etc., assuring an era of custom payment solutions.

2024 will also continue to see conversations and innovations around GenAI and other AI algorithms in payments, the security of transactions, and the simplicity of payment operations.