Trends for the future of digital payments revealed in Endava Report

Endava, a global provider of digital transformation, agile development, and intelligent automation services, announced the publication of their 2022 Global Payments Study. The report examines the global norms of today’s business-to-business (B2B) payments, the challenges of running a manual process, the benefits of digitization, and what payments might look like in the future.

“Over the past two years, companies began to challenge their reliance on the legacy systems they were supposedly tied to and wondered how they could improve their daily processes,” said Scott Harkey, Executive Vice President, Financial Services & Payments, Endava. “Our data reveals a payments landscape where 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, equaling roughly a fifth of global payment volume combined.
• Paper-based methods comprised less than a third of payments volume for all the regions in the study.
• North America trails APAC, MEA, LatAm, and Europe in payments modernity. North America scores lower due to relatively high check volume (16%).

• Organizations often rely on multiple tools for making payments. Bank-provided bill pay portals are the most widely adopted, but many also use ePayments software.
• The top focuses for companies in the next year are strengthening security, digitizing payments, and improving usage of analytics.

The Future of Payments

Endava asked survey respondents about their organization’s top initiatives and how they plan to change current payment method volume in the future to help anticipate the future of B2B payments. The highest priority initiative was security strengthening, which is consistent with the large number of organizations citing fraud as a major challenge in domestic and international payments.

Payment digitization was the second most important initiative for respondent organizations. To achieve this, organizations intend to aggressively increase the use of methods such as digital wallets, real-time payments (RTP), cards, virtual cards, and Automated Clearing House (ACH) while decreasing the use of dated, paper-based methods such as checks and cash. A sizable proportion of those who are already using them intend to increase their use of cryptocurrency in the future. However, many organizations deemed cryptocurrency (as a means of payment to vendors) inapplicable to their operations.

Insights by Industry

Endava data shows that retailers were more likely to have issues with payment errors, data management, late payments, and compliance when the study was broken down by industry. These problems are frequently caused by inconsistencies in the way payments are handled. Companies in the mobility vertical, on average, struggle with customer inquiry management, disparate technology, fraud, and payment errors.

Insurers and non-bank finance organizations face more quantifiable challenges than other businesses. Days payable outstanding, a lack of visibility into payments, duplicate invoices, and reliance on paper-based processes are examples. Many of these issues are directly related to invoicing.

Geographic Trends

Middle East and Africa

• Parts of the MEA region have some of the largest RTP payment volumes out of all the locales included in the study. 
• Saudi Arabia has had rapid adoption in the use of real-time payments despite only introducing the service in 2019. 
• The percentage of cash transactions among MEA respondent organizations is high, as is the usage of alternative methods, which can include cash-on-delivery, a popular payment option in both countries.

North America: 

• Endava experts assert that both RTP and digital wallets are ripe for growth in North America. 
• On the consumer side of things, Americans have mostly moved away from cash and check for their C2B and P2P payments, but this modernization has not yet carried over to businesses. 
• Younger generations, who are far more likely to expect a digital payments experience, may cause a shift in these antiquated habits as they assume roles as small business owners and finance professionals.

Europe

• Endava research shows next-day bank-to-bank transfers comprise a larger volume of payments in the EU over any other region. 
• Cash and checks are at a lower volume in the EU compared to other regions. 
• These payment methods are a rarity in Europe because the digital alternatives for transferring money are easy to use and ubiquitous. 

Data Summary

This study’s data comes from a 2022 survey of over 1,000 organizations of various sizes and industry verticals (except for banking institutions). Respondents were in senior management or higher and had intimate knowledge of and decision-making authority over their organization’s finance and payments strategy and processes.