The Jetsons don't write checks why should you?
Consumer payment technologies have advanced by leaps and bounds over the last twenty years. When I was a kid, checks were the norm and charge accounts were locally managed. Plastic came along and made charge accounts centrally managed. In the 90's consumers got bill payment and points for charge cards. Both took off. By the beginning of the millennium Paypal came around and reinvented person to person payments--no more cash needed. And now, consumers are hovering smartphones synced with biometric identification protocols over NFC readers at checkout. No wallets necessary in the future.
Seeing these great new technologies enter consumer markets is "electrifying" so to speak. I love the thought of ditching that loaf of leather in my back pocket. I've been working to drive innovation in payments technologies for two decades and it's not every day that the core infrastructure of payments changes--let alone at the current pace.
Yet these advancements are only benefiting consumers. As consumer tech forges into the future, business payments technologies--particularly for small and medium -sized businesses--lag far behind. For some merchants, it would appear as if they still pay their debts in gold, weighted in the flickering candlelight of some Renaissance Faire mock-up.
How could this be?
To understand the issue plaguing SMB payments, let's take a look at the process today. Small and medium businesses with fewer than 100 employees make up approximately 98% of all businesses in the U.S. that have employees. These businesses have been left behind and they are stuck making 80% of their payments the old fashioned way: paper, paper and more paper--there's tons of the stuff! Bills, invoices, contracts and checks all must be filed, stored and maintained. These processes involve many parties; between owners, accountants, employees, customers and vendors, a single check passes through many hands. And finally, businesses make a lot of payments. Without an efficient and expedited payment process, the sheer volume of payments drains vital resources from businesses. All this paper does serve a very useful purpose, though--checks and balances. The paper process allows a business to put in controls that are essential given the volume of transactions a business has.
Bringing business payments out of the dark ages is no easy task, and it won't happen exactly the same way as it has for consumers, but the industry is much closer today than ever before.
For starters, many businesses have already gone paperless for some of their business. First, emails replaced the common memo and a business can now create and share a wide variety of assets which all live exclusively in the digital world. This paperless movement has been furthered by the almost universal adoption of cloud services, which offer companies a softwareless experience and the benefit of lower technical debt, increased efficiencies and all around ease of use.
Additionally, modern companies have gone mobile. The advent and ubiquitous nature of smartphones has allowed for new interactions between technology and our everyday lives. No more rushing into the office to grab a document stuffed in a cabinet on the weekend. Those documents now live in the palm of your hand.
Most notably though, smartphones have revolutionized the way payments are made, both for merchants and consumers alike. The introduction of mobile payment solutions like Apple Pay, Soft Wallet and Google Pay, has liberated consumers from carrying dozens of cards. These platforms are gaining broad traction and will, predictably, become the norm in the not so distant future.
Fast forward five years and here's the way I see it for business payments: Smarter, digital payment systems for businesses of every shape and size that eliminate redundancies and create a more seamless payment experience. No paper, no middlemen, just payments.
By incorporating the advancements of consumer payment technologies and leveraging the power of cloud-based solutions, SMB owners can focus less on payments and more on their business. It's a future where no business is left behind and even the most cutting edge business technologies are simple enough for the mom and pop shops to use.
It's going to be an exciting transformation and I am thrilled to be a part of it.