Transfermate and 9 ways fintech is transforming B2B payments

In the last decade, the fintech industry has experienced exponential growth. At the end of 2021, the industry was valued at US$3.56tn with expectations to grow at a compound annual growth rate of 23.58% between 2021 and 2025.

In this article, we look at the ways in which the fintech industry is transforming the global business-to-business (B2B) payments landscape according to global payments company, Transfermate. 

1. Instant payments globally

While 50% of people in the US and UK still use cheques, the payment method is quickly becoming a thing of the past. Instead, they are being replaced with more efficient and more secure payment methods. 

While modern payments methods for suppliers require an initial setup, they offer procurement and finance teams instant payment capabilities, better cash flow management, improved supplier relationships, and enhanced traceability.

2. Fraud and money laundering detection in real time 

Quite possibly as old as business itself, fraud is a continuous battle for many organisations. 

In 2021 alone 49% of firms reported serious payment fraud attempts, with 15% of all companies suffering a loss. A single case of fraud can cost an organisation an average of over US$1.5mn.

A core element of modern payment solutions is automated fraud detection which looks out for suspicious payment transfers or supplier invoices.

3. Transparency

For any procurement function, having good communication with suppliers is crucial to creating a smooth running and efficient supply chain. “In the past, money moving across borders would essentially disappear into the ether as it moved along traditional banking rails, before appearing on the other side,” commented Transfermate. 

With modern payment methods, both payer and payee can track the movement of money from the second it's sent to when it arrives. Compared with traditional payment methods the amount paid will also be the amount received. 

4. Reduced bank fees

Often traditional payment methods came with banking fees. Moving money through several banks - especially international ones - could result in a cut being taken from the total as a fee for moving the money.

Quite simply, the amount paid is the amount received with modern fintech payment rails. “If open finance continues to accelerate, it could reshape the global financial services ecosystem, change the very idea of banking, and increase pressure on incumbents,” said McKinsey. 

5. Reduced foreign exchange (FX) risks and costs

In addition to banking fees, procurement teams could be subject to foreign exchange (FX) fees and currency fluctuations with traditional methods of paying suppliers. 

With the use of modern payment solutions, the infrastructure in place offers near-instant payments excluding the money from being subjected to this kind of movement and FX risk. 

6. ‘Procure-to-get paid’

Transfermate highlights that a real indicator of how traditional B2B payment methods have been transformed can be seen in businesses earning money on FX transactions by partnering with fintech payment providers. 

“Because of the global infrastructure the fintech company has set up, they can offer partners a commission on international payments and the FX margins that they receive. This means that global payments become an additional revenue stream for the business rather than just a straightforward cost,” said Transfermate.

7. Genuinely digital infrastructures

For fintech payment companies, ‘infrastructure’ means a global network of regulatory licenses and bank accounts. This means that fintechs can operate in multiple countries and open local bank accounts, therefore they can safely and securely bypass the traditional banking payment rails.

“A lot of the B2B payments we thought of as digital actually required lots of manual work in the background, but fintech solutions have changed that paradigm, creating a genuinely digital, global banking infrastructure,” said Transfermate.

8. Mass automated payments 

With the help of modern payment solutions, the procurement function can reduce the headache of mass payments. Previously a time-consuming and error-prone task, procurement teams can confidently send, with an automated solution, mass payments in batch form. 

9. Application programming interface (API) integration

“One of the fundamental challenges with the global payments system is that it requires different systems to communicate and interact with each other,” explained Transfermate. 

With multiple technologies comes an added layer of complexity, but with modern application programming interface (API) integration fintech companies can connect disparate payment systems driving greater efficiencies.

“While they can require a big lift to get off the ground, the savings (both in money and time) businesses make once they kick into gear can be genuinely game-changing,” said Transfermate.