As we emerge from the too-lengthy COVID business fog, it is interesting to see how businesses have adapted to adversity, in their business practices and even in the way that they transact.
Businesses of all sizes have discovered that personnel can work remotely— efficiently and with a high level of productivity. As a result, many businesses are opting to allow employees to permanently work from home, thereby reducing corporate costs and retaining workers that are embracing work-from-home as their new “normal.” But, what about business payments? Are businesses reassessing their payment methods and strategies as 2022 and 2023 come into focus? The simple answer is “Yes,” though it is yet unclear as to what decisions are being made.
It is important to realize what motivates payment method decisions. Ubiquity, interoperability, security, speed, cost, and convenience are all important factors from both accounts payable and accounts receivable perspectives. Yes, those are important, but a company’s payment system status quo is a compelling factor, as well. Given that there are costs and disruptions associated with changes to payment processes, it’s no wonder that many businesses are slow to switch to an alternate or additional method. Many businesses are already using multiple forms of payment.
According to the 2022 Payments Cost Benchmarking Survey published by the Association for Financial Professionals (AFP), checks remain the most popular form of business payment, with an astounding 92 percent of organizations surveyed still using checks for incoming payment transactions, while 86 percent continue to use them for outgoing transactions. The number of checks actually issued is in decline, however, as ACH transactions and other methods for payment become more prominent.
Same-day ACH emerged in 2015 with a per-transaction cap of $25,000. Next month, that cap for Same-Day ACH is expected to reach $1,000,000. The AFP tells us that 87 percent of companies surveyed currently use ACH Credit and ACH Debit for payments, while various forms of card payments are also in use to lesser degrees.
It is interesting to note that the Federal Reserve recently launched its “Faster Payments Solution,” termed FedNow℠. The rollout for FedNow is scheduled to begin sometime in 2023 and is announced to be a real-time (instant), around-the-clock settlement service for use by businesses and individuals alike. Similar to Same-Day ACH, FedNow will launch with a transaction cap of $25,000, which will rise over time. Adding to the launch anticipation is that this service is architected for interoperability, which would speed adoption.
Whatever the payment mode, security will remain an important issue as companies everywhere try to stay two-steps ahead of persistent criminals who want to steal money. Checks, ACH, and card payments are all being modernized to thwart thefts and we can expect that secure payments will remain a top priority for all payment types and their service providers.
I would be remiss if I did not mention the continued growth of cryptocurrencies as a payment option for businesses in the near future. Where “crypto” has been invested in and transacted by a largely early-adopter crowd, it’s use is spreading globally and I believe you will see it used with greater regularity by businesses as necessary regulation, ease-of-use, transparency, increased security and other developments help to take cryptocurrency transactions mainstream.
If you are a business and are wondering which payment method is best for you, don’t worry. There are many options for modernizing the payment systems you have, while being able to more easily port to or also adopt other payment types, if you choose.
The good news is that the COVID fog is clearing, and that means better visibility as to how payments can work best for your company in the years to come. The best business intelligence you can receive will come by participating in MPC22 (Atlanta—August 2022). This is an event that helps define the future of payments and I hope to see you there. In the meantime, if you’d like to contact me directly, you can do that here: [email protected].
Chief Mobility & Marketing Officer, AP Technology & MPC Advisory Board Member
Greg Wilfahrt is the Chief Mobility and Marketing Officer at AP Technology. He has been immersed in the marketing of mobility and technology for 25+ years. Greg started and managed six start-ups, including a wireless communications company with nearly 60 million users, achieving mobile billing integration with wireless carriers in 187 countries. Author of the “Global Mobile Consumers Bill of Rights,” and co-author of AP Technology’s “Mobile Payments Bill of Rights,” Greg Wilfahrt’s commentaries on mobility, marketing, payments, content distribution, and technology have appeared on/in CNBC Europe, FOX News, NY Times, Forbes, Businessweek, and news outlets around the world.