The growth of B2B payments in India over the years has been increasing gradually. Unlike the B2C segment, which is prone to volatility, the changes here are subtler. They typically happen over time, making it difficult for experts to catch such signals and predict future trends accurately. In India, there is a trend of multiple payments being made by businesses with diverse modes. 

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The adoption of digital payments has increased significantly. Several factors have contributed to this rise, including the demonetization moves in 2016, the launch of BHIM, and the growing smartphone user base. Per the IAMAI-PWC report released in December 2019, the Indian digital payment industry is expected to grow at a CAGR of 27% between 2017 and 2022.

Digital Payments

Digital payments are the ideal way for businesses to pay and get paid. They are fast, convenient, secure, and cost-effective, giving customers more payment options. Digital payments enable companies to streamline their operational processes and accelerate their cash flow.

The world is going digital rapidly, even if it is due mainly to the coronavirus pandemic forcing everyone indoors; we expect this trend to continue in 2022 too. The Government of India is already working on its unified payment interface (UPI) 2.0 platform to ensure safe transactions via UPI mode, which will be launched soon. Google has also announced that India's digital payments market can grow by five times to reach over US$ 1 trillion by 2023 from US$ 200 billion in 2019, driven by the rapid increase in digital payments.

Google has also announced that India's digital payments market can grow by five times to reach over US$ 1 trillion by 2023 from US$ 200 billion in 2019, driven by rapid growth in the adoption of digital payments among consumers.

Automated Payments

Automated payments (also called recurring payments) can occur weekly, monthly, or yearly. They are reliable, secure, and convenient to set up and use.

In India, the use of automated or recurring payments is growing steadily. As businesses seek faster and safer ways to do business in India.

AI and Machine Learning

Machine learning is used to identify fraud. That's because a machine can process data in seconds that would take humans days or weeks.

Machine learning can automate payments - by matching invoices with purchase orders, matching remittances with receipts, and matching contracts with payments - saving time and improving accuracy rates.

Machine learning can identify trends in data (like changes in spending behaviors) that may indicate fraudulent activity (which allows you to act pre-emptively).

Machine learning can predict potential opportunities or threats (given what you've observed thus far).

Blockchain and Cryptocurrency

Blockchain technology is a decentralized ledger of transactions that are immutable and unalterable. The users can make changes to it only if the rest of the users agree to make those modifications. This feature makes blockchain technology an excellent choice for the payment system because there is no need for a third party, such as banks or credit unions, for validation. Since there is no need for intermediaries, this will significantly reduce transactional costs.

Blockchain technology has the potential to become a global digital currency that can be used by anyone and everyone in the world regardless of race, religion, or nationality. However, before it becomes a reality, it has to overcome several challenges like scalability issues, technical flaws such as the double-spend problem (where one person uses their cryptocurrency multiple times), and volatility risk (where value fluctuates too much). Blockchain technology will be implemented across various industries very soon.

Card Tokenization

Businesses have rapidly adopted card tokenization due to its ease of use - it requires only a few lines of code to integrate into existing payment systems - and its ability to protect consumer data. In short, tokenization is considered a best practice for handling consumer data in mobile and online channels.

Scope of B2B Payments 

In a B2B e-commerce environment transformed by the pandemic, increasing digitization, and a new generation of buyers and sellers, the above trends can be expected to play a massive role in the growth of B2B payments in India by 2022.

Mobile wallets, UPI apps, and other payment facilitators are expected to make significant strides. A shift from cash to cards has already begun; mobile wallet adoption among small businesses will accelerate this trend further. With increased internet connectivity and penetration of smartphones across all economic classes, B2B companies will focus on their app-based payment solutions for their clients or customers.

Conclusion

The fintech industry would boost with more investment opportunities in digital payments, blockchain technology development, data analytics, cybersecurity, etc. M&As will also play an essential role in expanding the existing base of financial services companies while providing better services to users across different platforms and formats.

Innovations such as buy "now pay later schemes" and cryptocurrency should see higher acceptance for more significant business transactions. The infrastructure for digital payments is already in place to support this trend. 

To understand the infrastructure of digital payments, you can check our other blogs about Payment instruments and Payment players involved in digital payments.