BURLINGTON, Mass., Jan. 04, 2022 (GLOBE NEWSWIRE) -- Aliaswire, a provider of digital payment and credit solutions for businesses and financial institutions, is looking at some big shifts in online bill payments in 2022 as both banks and billers look for ways to digitize more payment-related processes and improve those that are already online.
More than four in five Americans (82%) used some form of digital payment in 2021, according to McKinsey’s 2021 Digital Payments Consumer Survey. That’s up from 78% in 2020 and 72% in 2016. On the B2B side, digital adoption is much lower – with some estimates of less than 50% of payments being made digitally, and even less for digital invoices.
“Billing and payment have become critical touchpoints between businesses and both their consumer and commercial customers,” said Jed Rice, CEO of Aliaswire. “The reality is that poor billing and payment experiences drive high call center volumes and costs while also threatening customer satisfaction and loyalty. As a result, both billers and banks are making it a top priority to take the friction out of these processes. We’re seeing that start to play out on multiple fronts.”
Rice and his team at Aliaswire are watching several shifts that they believe will have a big impact in 2022.
1. B2B Payments Get Real (-Time)
There has been lots of news about real-time payments in 2021. In 2022, the promise becomes a reality for the general market. Here’s why:
- Customers want goods shipped more quickly, and suppliers will prioritize buyers who pay more quickly.
- Sellers want to reduce their cost of getting paid and they want to get paid more quickly. That means avoiding card payments wherever it makes sense.
- Everyone wants to reduce the risk of fraud.
Bank-powered real-time payment (RTP) rails not only increase the speed of payments, they also reduce the cost of the payment and reduce the risk of fraud. For example, Citi recently announced new real-time payment capabilities that enable the payer to acknowledge payment requests and authorize the payments in real time, eliminating issues of account fraud, data entry mistakes and bank account insufficient funds errors. By validating the account, payment amount and funds availability at the same time, the payer accepts full responsibility for the transaction. The Biller receives funds immediately, eliminating the potential for returns or charge backs. This “push” versus “pull” approach eliminates the friction of the buyer initiating the transaction and getting it approved on the bank side. That’s been the major obstacle to date.
2. Conversational Payments Up the Volume
As consumers and businesses continue to get more comfortable with voice-enabled technologies, they will make more “conversational” payments with tools like Alexa, Google Assistant, and Siri – via home assistants and mobile smart devices. One of the biggest obstacles to date has been the potential for fraud by voice bots. The use of voiceprints as biometric signatures now provides an added security layer to overcome these concerns.
As in most areas of payments, B2C use cases such as rent, utilities, and other recurring payments, will lead the way, but B2B payments won’t lag far behind as users get more comfortable with conversational transactions. The other thing to watch for is banks’ adoption of these capabilities. Consumers already do some online banking by voice. As demand grows on the payment side, banks could accelerate adoption dramatically by incorporating conversational payments into their digital services.
3. FinTechs Target the SMB Credit Crunch
Financing has always been a challenge for SMBs, and the pandemic only exacerbated that problem. Some are deemed too risky; others lack the proper credit history. Either way, they can’t get access to the credit they need—either in the form of loans or business credit cards— to maintain and grow their business.
At the same time, we’re seeing the explosion of digital solutions like “Buy Now, Pay Later” providing consumers with short-term access to funds at the point of sale. To date, the focus has been on consumer-facing businesses. And it has not done anything to help SMBs establish a credit history for their long-term health. That will change in two primary ways in 2022:
- BNPL solution providers will expand their focus on B2B merchants and their customers. These relationships will assist both SMB merchants and their buyers while eliminating much of the lending risk and predatory rates that exist at the B2C level.
- We’ll see new small business card solutions integrate daily receivables with card accounts to help businesses pay down balances on a daily basis, while building a long-term credit history for the future.
4. ACH Payments Move into the Fast Lane
Nearly 27 billion payment transactions ran on ACH rails in 2020. That is expected to have grown by 10% in 2021 when all the numbers come in. ACH transactions are popular because they are both cost efficient and secure. The only thing holding ACH back these days is a lack of speed due to its time-intensive account validation process. As a result, some billers push their customers to credit cards. This costs them more, but it provides certainty of funds.
Nacha is working closely with the payments ecosystem to streamline the account validation process, so it more closely mirrors that of a credit card transaction. The goal is to detect invalid, frozen and closed accounts in advance to reduce return rates and increase the success rate of ACH transactions. This is speeding funds flow while reducing costs and providing more certainty of funds.
“Banks have a big role to play in all of this,” added Rice. “Businesses look to their banks as trusted financial advisors, and banks are looking for new revenue streams and opportunities to be more strategic partners to their commercial clients. Modernizing bill pay presents a great opportunity for them to come together to address a critical business need.”
About Aliaswire, Inc.
Aliaswire is a fintech company based in Boston with a history of innovation in payments. The company supports leading financial institutions and merchant services providers with bill pay through DirectBiller® and small business credit solutions through PayVus®. For more information, visit https://www.aliaswire.com/.
