Digital payment trends to watch in 2023

Some digital payment trends in 2023 aren't exactly new. Seeking to transform your AR processes and offer a contactless payment solution for B2B transactions has existed even before the pandemic. Some began to take hold in 2022, like embedded payments, and are likely to grow rapidly over the next year. And a few, such as cross-border payments, are still in the works.

Regardless, one thing is clear: Digital payments are a fast-moving force for businesses and consumers.

Unlike traditional payment methods, digital transactions are fast, secure, and auditable. These three primary motivators make the shift towards further digital adoption valuable for businesses.

Today, we will review some of the leading digital payment trends to watch out for in 2023 and what we might see throughout the year.

1. Accelerating digital adoption

While the pandemic jumpstarted a much-needed transition from manual processes to automated payments, we will likely see the momentum build as more businesses go digital. Early adopters have largely proven the success of digital payments, and executives and employees now have first-hand experience using easy payments as a consumer.

Traditional payment methods, like checks, are in steep decline. For example, in 2004, 81% of B2B transactions were made via check. Almost 20 years later, that amount has plummeted to 33%. Today, digital and real-time payment solutions are the next step in that trend. Among consumers, 75% have used a digital wallet over the last year. And businesses won't be far beyond.

Many CFOs, AR team managers, and other stakeholders are aware that digitization and automation are becoming less of a competitive edge as necessary for survival. Digitization offers healthier cash flow, a lighter workload, and in-depth insights into the payments process.

And with more and more solutions integrating with legacy ERPs like NetSuite, Sage, and FinancialForce, there are fewer barriers to entry. Employees already know how to use their ERP—the new integration adds to knowledge rather than requiring that they learn an entirely new system.

But it's about more than employee experience and faster revenue. Digital adoption, while it does require investment in understanding cybersecurity, may also mitigate many compliance concerns.

An end-to-end digital payments solution provides a log of every transaction. If completed on the blockchain or a blockchain-hybrid system, these logs cannot be changed and are ideal for audit and pristine recordkeeping. Selecting a secure solution that uses advanced techniques like tokenization for funds-on-file further protects against malicious threats.

2. Integrating embedded payments

Embedded finance will likely continue to be the primary innovation of 2023. A study from Bain Capital found that embedded finance will make up $7 trillion in transactions by 2026.

Embedded finance in B2B invoicing can take a few different forms.

But paying an invoice almost directly from your email, saving your payment method, and paying in one click? Well, two clicks if you count the invoice email and the payment portal. That's convenient.

And it's more than a payment gateway. Once customers enter their payment information, they are not redirected to a banking portal and back to the merchant's site. Instead, the entire transaction can be completed on the checkout screen. Think Amazon functionality with business-branded pages; you can imagine what a game-changer this feature is for big and small businesses.

This is made possible by a branded payment portal, which saves and securely stores your customer's information. But it's more than that. For B2B payments, which take up to 60 or 90 days to be fulfilled and are bound to regulation, embedded payments allow businesses to reduce their DSO, increase transparency, and improve customer relationships.

3. Mobile commerce

The advent of mobile commerce has been around for a while. But it continues to evolve and grow. By the end of 2022, 63% of eCommerce orders when through a mobile device. Both B2C and B2B organizations see more and more orders from mobile devices. Yet online shopping isn't the end of mobile payments.

For AR teams, this can mean a few things:

1. Payment portals should be accessible and readable via phone.
2. Saving payment methods can make it easier for customers who use credit cards, ACH, etc.
3. Adopting mobile wallet payments may provide a more seamless experience.
4. Being able to pay via link or SMS.

Regardless of the form your mobile-friendly payments take, implementing a device-responsive approach can drastically improve your customer experience.

4. Demand for real-time payments

More consumers are using bank-to-bank transfer platforms like Zelle and Venmo. This is a global trend, with countries like China and India leading the way regarding mobile, real-time payments. But the U.S. is catching up.

In 2023, the government plans to launch FedNow, a real-time payment system with B2C and B2B capabilities. But many private platforms are also ready to take on the challenge of B2B real-time payments.

Solutions that offer bank-to-bank transactions for businesses exist today. Payments solutions (including us!) make this work by creating extensive bank partnerships. In some cases, it's possible to include foreign banks for these transfers through regional software acquisitions.

5. More fraud protection

A significant stumbling block in payments, overall, is fraud. Preventing authorization fraud –regarding Zelle and other instant payments– is just the newest variation. But widespread abuse of the system by fraudsters has led regulators to look at revising Regulation E and forcing financial institutions to take responsibility for fraudulent payments.

In terms of B2B transactions, the best way to prevent this is to employ automation for invoicing and keep a clear list of customers and vendors. Automation not only reduces the opportunities for fraud, both internal and external, but human error.

To prevent additional threats of stealing sensitive consumer data, working with a solution that tokenizes the database is essential. This limits who has access to the original data, thus preventing hackers and occupational fraudsters from taking valuable data.

6. Working on cross-border payments

Another hurdle many companies want to address in 2023 is cross-border payments. How far companies will succeed is another matter.

Each country has its own set of digital payment rules and platforms. Until there is a method for these to work cohesively, or there is a third-party program or B2B real-time transactions, global businesses have a few options to work with.

For example, businesses can:

• Depend on bank wires, crypto, credit cards, and debit cards
• Charge convenience fees for these options to reduce processing costs
• Accept multi-currency payments

One way payment platforms are looking to extend capabilities across borders is through acquisitions. In reality, the acquisition of payment platforms will likely increase in 2023 for domestic and international applications. But active, strategic brands that look abroad to acquire assets can provide a more extensive global payment network over time.

Jumpstart Your Payments Strategy

While many upcoming trends are still evolving, organizations can digitize their payments process and optimize their AR strategy today. Tools and strategies like the following all contribute to a more robust and transparent payment system:

• Payment portals
• Smart lockboxes
• Offering various payment methods
• Using convenience fees on credit and debit cards
• Automating reconciliation and collections
• Creating mobile-friendly invoices

To learn more about how companies save time and money by transitioning to digital payment solutions, check out this case study on Motorola Solutions.