Endava (NYSE: DAVA), a provider of digital transformation, agile development and intelligent automation services, has released the 2022 Global Payments Survey.
This report explores the norms of the global business-to-business (B2B) payments landscape, the challenges of operating manual processes, the benefits of digitization, and the future of payments.
“Over the past two years, companies have begun to challenge their reliance on legacy systems they feel bound to and look for ways to improve their day-to-day processes.” scott Harkey, Executive Vice President, Financial Services and Payments, Endava. “Our data reveals a payments landscape in which organizations are no longer satisfied with the status quo and are using modernization initiatives to increase efficiency.”
Key insights from the report include:
- Checks and cash are no longer the dominant methods they once were, and together account for about one-fifth of global payments.
- Paper-based methods accounted for less than one-third of payment volumes in all regions surveyed.
- North America lags behind APAC, MEA, Latin America, and Europe in terms of payment recency. North America scores lower due to its relatively high check volume (16%).
- Organizations often rely on multiple tools to make payments. Bank-provided bill payment portals are the most widely adopted, but many also use electronic payment software.
- The companies’ biggest focus in the coming year will be enhancing security, digitizing payments, and improving their use of analytics.
The future of payments
To predict the future of B2B payments, Endava asked survey respondents about their organization’s key initiatives and how they plan to change the volume of their current payment methods in the future. A top priority initiative was enhancing security. This is consistent with the high number of organizations citing fraud as their biggest challenge in domestic and international payments.
Digitizing payments was the second highest priority initiative for responding organizations. To achieve this, organizations are aggressively increasing their use of methods such as digital wallets, real-time payments (RTP), cards, virtual cards, and automated clearinghouses (ACH), as well as dated alternatives such as checks and cash. We plan to reduce the paper-based methods attached.
Of the organizations currently using them, a significant percentage plan to increase their use of cryptocurrencies in the future. ) not applicable to business.
Industry insights
Looking at industry-specific research, Endava’s data shows that retailers are more likely to have payment errors, data management, payment delays, and compliance issues. These issues often stem from discrepancies in how payments are processed. Compared to average, companies in the mobility industry suffer from customer inquiry management, various technologies, fraud, and payment errors.
Insurance companies and non-bank financial institutions face more quantifiable challenges than companies in other industries. These include days of outstanding payments, lack of visibility into payments, duplicate invoices, and reliance on paper-based processes. Many of these issues are directly related to billing.
geographical trend
North America
- Endava experts argue that both RTP and digital wallets are ripe for growth in North America.
- On the consumer side, Americans have mostly moved C2B and P2P payments away from cash and checks, but this modernization hasn’t yet taken over by businesses.
- Younger generations, who are far more likely to expect a digital payment experience, could bring about changes to these outdated habits as they take on roles as small business owners and financial professionals.
Europe
- Endava research shows that next-day interbank transfers make up more payments in the EU than anywhere else.
- Cash and checks are scarce in the EU compared to other regions.
- These payment methods are rare in Europe. Because digital alternatives for transferring money are easy to use and ubiquitous.
Middle East and Africa
- Some of the MEA regions have the largest RTP payout volumes among all regions included in the study.
- The use of real-time payments is growing rapidly in Saudi Arabia, even though the service was only introduced in 2019.
- MEA respondent organizations have a high percentage of cash transactions and high usage of alternatives, which may include cash on delivery, a popular payment option in both countries.
data summary
The data in this study is based on a 2022 survey of over 1,000 organizations (excluding banking institutions) of all sizes and industries. Respondents were at senior management level or above and possessed in-depth knowledge and decision-making ability of their organization’s financial and payment strategies and processes.
Francis Bignell