Digital payments boost business growth, but accounting departments are slow to adopt. Switching from paper checks to digital forms of payment accelerates AR processes and collections.
B2B payments are now customer touchpoints. These transactions are no longer back-office tasks; they’re crucial customer touchpoints. A study shows checkout experiences affect repeat business and that cashless payment methods drive fast, efficient growth.
Consumer payments have evolved, and most now occur digitally through payment apps and online platforms. Contactless payment is the present standard in our move towards a cashless society.
Despite advancements, 40% of B2B payments are still manual. The pandemic highlighted the costly inefficiencies of traditional systems.
What Are Digital Payments?
Digital payments transfer funds electronically via bank wires, ACH, and mobile payment systems such as QR codes and digital wallets. These are quick, efficient, and often complete with a few clicks.
Types of Digital Payments
Digital forms of payment include:
- Mobile payment options through payment apps.
- Bank wires and ACH.
- QR codes for easy transactions.
- Digital wallets like Apple Pay.
Key benefits include:
- Consistent Cash Flow. Faster payments maintain cash flow.
- Time and Cost Savings. Automates processes and reduces errors.
- Enhanced Security. It is more secure than paper checks, reducing fraud.
- ERP Integration. Streamlines reconciliation and data entry.
Digital Payment Platforms
Digital payment platforms are online services that allow businesses to accept payments electronically. They provide a secure and convenient way for customers to pay and help businesses streamline payment processes.
Some benefits of digital payment platforms are:
- Convenience. Customer can pay online by entering their payment information and clicking a button to complete the transaction.
- Security. Encryption and other security measures help protect customer data and reduce the risk of fraud and identity theft.
- Efficiency. Automating tasks such as invoicing, payment processing, and reconciliation can help businesses to streamline their payment processes.
- Cost-effectiveness. Digital payment platforms can be more cost-effective by eliminating the need for postage, printing, and other associated costs with traditional payment methods.
Platforms like Paystand help businesses streamline their cashless transactions through key features that include:
- AR Management. Digitizes and automates accounts receivable.
- Virtual Terminal. Facilitates card-not-present transactions.
- Payment Portal. Allows multiple payment methods and self-service.
- Fund on File. Securely stores payment information for future charges.
Traditional Payments vs. Digital Payments
Traditional, paper-based payment methods are slow, costly, and error-prone. For example, processing a check can cost $4-$20 and take up to 15 days to clear, impacting cash flow and increasing DSO.
Among the challenges of traditional payment methods are slow payment cycles and delays, higher fraud risk, and the potential for insufficient funds due to stopped payments.
Many industries still use paper checks, but digital payments offer speed, convenience, and safety. Since 2020, more businesses have adopted cashless payment methods to stabilize revenue and expand.
Are Digital Payments Safe?
Contrary to popular belief, digital payments are more secure than paper checks. The Association for Finance Professionals reports that checks are the top source of B2B payment fraud. Between 2015 and 2019, 73% of companies experienced fraud attempts, and 70% were check-related. Checks pass through many hands, increasing the risk of tampering.
Digital payments, however, are handled by just the sender and receiver. Algorithms and smart contracts protect against tampering and ensure the payment reaches the intended party.
Elevate Your AR with Paystand
Paystand offers a comprehensive B2B payment solution, automating cashless transactions and reducing transaction costs. To see if Paystand fits your business, book a free demo or explore our ebook on the competitive advantages of digital payments.