Slow Initial Takeup of Mobile B2B Payments
In a survey conducted for the Capgemini/BNP Paribas 2016 World Payments Report, more than 90 percent of payments industry executives agreed that corporate adoption of mobile devices for payments was low.2 Another payments-industry survey found similar results,3 and in a 2016 survey by Mobile Payments Today, 45 percent of executives said that adoption of mobile B2B payment applications by businesses was slower than expected.4
Concerns about payment security were a key inhibiting factor, cited by more than half the executives in the Capgemini/BNP Paribas report. Other factors included a lack of integration with business IT systems, difficulties in centralized management and control of mobile devices, and a preference for other online methods, especially for high-value payments.5
"Consumerization" Factors into Mobile B2B Payments Adoption
Still, there are signs of increasing adoption of mobile B2B payments. One major global bank announced in October 2016 that the value of mobile payments using its corporate banking platform, accessed by customers in 57 countries, had more than doubled in 18 months, with a sharp increase in payments by chief financial officers and corporate treasurers indicating that “corporate usage has moved into the mainstream.” The bank said total corporate mobile payments since the platform’s inception had topped $100 billion.6
One factor playing into this shift is the “consumerization of corporate banking,” as management-consulting firm McKinsey & Co. put it: as customers grow accustomed to faster and more convenient payments as consumers, they demand similar convenience and service levels in corporate payments.7 Mobile B2B payments growth may also be linked to a broader trend toward mobile corporate banking: a 2016 Raddon Research Insights survey found that among businesses with up to $10 million in annual revenue, 52 percent rely on mobile banking for day-today account access.8
Smartphones Allow Anytime, Anywhere B2B Payments
Smartphones are used both to directly make payments during business travel or while out of the office for other reasons, and for payment-related functions such as approvals and basic analytics. A growing number of financial institutions are offering corporate mobile payment capabilities, including apps that enable business users to track and analyze travel and other expenses. Banking and credit-card accounts are increasingly integrated with the mobile payment systems provided by the major smartphone companies. These systems use tokenization, a process in which a token stored on the phone replaces the 16-digit primary account number, thus protecting the account information.9 Some experts suggest that tokenization may help overcome concerns about mobile payment security.10
The “3As” of Mobile B2B Payments: Approvals, Alerts, and Analytics
Other major payment-related roles for smartphones are in what Capgemini/BNP Paribas called the 3As: Approving payments, receiving Alerts, and driving Analytics. In these roles, smartphones can help to streamline payment processes that may have been initiated elsewhere within the company. Per the Capgemini/BNP Paribas report, smartphones provide corporate treasurers with the flexibility to approve payments anytime and anywhere.
A 2016 report from research and advisory firm Ardent Partners called mobile solutions for invoice approval a “game-changing” innovation for accounts payable teams.11 Ardent noted that in some industries – including manufacturing, consulting, oil and gas, and warehousing – many executives don’t spend much time at their desks. This can make it difficult to approve invoices, exposing companies to late payment penalties or missed discounts. The ability to approve invoices from a mobile device potentially eliminates this issue.
Mobile B2B payment alerts may be useful for keeping treasurers informed of the status of any sensitive or urgent payments. In fact, the Capgemini/BNP Paribas report quotes a U.K. bank executive who notes that firms currently “use mobile mostly for alerts.” Smartphones are also used for basic analytic functions including the creation of dashboard views and reports. These may include reports of pending transactions, cash balances and availability, open foreign exchange positions and value at risk, straight-through-processing (STP) rates, and risks such as unpaid items, according to Capgemini/BNP Paribas. However, they add that more complex analytics may be better handled by other devices such as notebook computers.
Adoption of mobile B2B payments has been slow, but there are signs of growing interest and rising adoption. New payment capabilities may help to assuage security concerns. Capgemini/BNP Paribas believe that mobile devices will continue to be used largely as extensions of or complements to existing corporate solutions; however, they believe that factors such as integration of mobile devices with real-time payment systems and corporate business systems, improved security, and trade finance will contribute to increasing adoption of mobile B2B payments.
- 2016 World Payments Report, Capgemini; https://www.worldpaymentsreport.com/
- "NAPCP and TSYS Survey Results Identify Overall Commercial Card Program Satisfaction, Barriers, Opportunities, and Attitudes Towards Emerging Technologies", NAPCP and TSYS; http://www.prweb.com/releases/2016/12/prweb13934759.htm
- 2016 Mobile Payments State of the Industry, Mobile Payments Today; https://www.mobilepaymentstoday.com/whitepapers/executive-brief-2016-mobile-payments-state-of-the-industry/
- 2016 World Payments Report, Capgemini; ; https://www.worldpaymentsreport.com/
- “HSBC hits $100bn mobile payments mark for corporates”, Banking Technology; http://www.bankingtech.com/602271/hsbc-hits-100bn-mobile-payments-mark-for-corporates/
- Global Payments 2015: A Healthy Industry Confronts Disruption, McKinsey & Co.; http://www.mckinsey.com/industries/financial-services/our-insights/global-payments-2015-a-healthy-industry-confronts-disruption
- “Mobile banking and small businesses: 5 key insights”, Credit Union Magazine; http://news.cuna.org/articles/110635-mobile-banking-and-small-businesses-5-key-insights
- “Can B2B Payments Go Mobile?.”, PYMNTS.com; http://www.pymnts.com/company-spotlight/2015/can-b2b-payments-go-mobile/
- “ePayables 2016: Eyes on the Prize”, Ardent Partners; https://www.bottomline.com/us/resources/resource-center/research-reports/ardent-partners-epayables-2016-eyes-prize-state-epayables