Fintech Fab Five: How Payment Digitization will Drive Cross-Industry Change
Recent Statista research shows the rapid impact of electronic payments – total transaction value by digital payments will amount to $927bn in 2018, and increase of 33 percent compared to 2016 figures of $692bn. The tentacles of fintech are spreading across almost all industries which rely on payments – with some reacting faster than others.
Here are five industries experiencing change at various speeds:
- B2B Payments: Better late than never
Perhaps further behind in the fintech curve than they should be are B2B payments. 2018 will be a big year for B2B payments as they finally go digital. The delay in adoption is often attributed to the complex nature of B2B payments – most transactions involve multiple stakeholders, are usually attributed to POs and budgets, and are managed manually. The check remains in first place as the most common method of payment acceptance in US B2B payments, but only just. The Association for Financial Professionals has found that in 2004 81 percent of B2B organizations paid by check, but by 2016 this number had shrunk to 51 percent.
The US Government has already mandated that in 2018, all invoicing for business-to-government payments will be electronic-only. This is bound to have a roll-on effect into the B2B market as a whole. In 2018, expect more B2B CFOs to begin to realize the efficiency benefits of digitizing payments.
- Healthcare: Fintech filling the gap in patient responsibility
According to eHealth analysis of the healthcare marketplace during the 2017 open enrolment period, the average annual deductible was over $8,200 for a family plan, accounting for a 3 percent or $249 increase on the previous year.
Maximizing the chance of capturing patient payments means providing a friction-free payment process. Recent statistics show over 50 percent of patients prefer to be billed electronically. In fact, 79 percent of patients are happy to provide their email address for billing and correspondence, yet 90 percent of practices are still mailing paper-based statements. Healthcare providers will need to accommodate a broad variety of electronic options in 2018 or face missing out on crucial revenue.
- Credit Unions: Digital driving new member experiences
In 2018 Credit Unions will look to technology in order to remain competitive with the big banks. To help lure members away from larger institutions and keep their custom means providing competitive offerings while delivering a personalized service.
When it comes to technology, the size of Credit Unions can actually become an advantage. Smaller business have smaller infrastructure, so adapting to integrate new technologies takes less time, meaning they can quickly accommodate the evolving needs of a tech-savvy membership base. In 2018, we will witness more credit unions turning to technology providers to help expand their payment solutions. This trend was identified by respondents to a Q4 2017 BillingTree survey on financial services technology adoption. The survey found 66 percent of respondents plan to adopt new payment technology in 2018 – a steep rise from just 14 percent the year before.
- Accounts Receivables Management: Adapting to changing consumer preferences
With increasing numbers of patients with high-deductible health plans or PPOs means more healthcare payments will fall into accounts receivables management (ARM). Much like providers themselves, healthcare ARM organizations need to be able collect payments online using all payment types, including the ability to accept Health Saving Account (HSA) and Financial Savings Account (FSA) payments.
The BillingTree annual ARM industry in 2017 found the number of ARM organizations processing payments from HSAs/FSAs had increased 10 percent from 2016. Expect this number to grow in the year ahead as patient, provider and accounts receivables adjust to the sharp rise in patient responsibility and shifting healthcare payment landscape.
- Property management: wave goodbye to paper checks and hello to plastic
Checks have historically been the traditional method of payment for property management and community fees, but as current spending statistics from the Federal Reserve Payment Study (FRPS) and Survey of Consumer Payment Choice (SCPC) show, over the last decade, total check spending now ranks below credit, debit and ACH payments. Currently, the cost for using a card to settle community fees and rent payments are higher than those consumers are used to when purchasing retail goods. To compete with debit account and ACH rates, costs for settling rent payments and community fees by card need to come down.
Already, certain card providers are creating new rate categories for apartment due payments and rentals. In 2018, this will open the door to the availability of more electronic payments options which offer convenient ways for tenants to settle rent and community fees, in turn increasing revenue for property managers and customer service.
No industry untouched
Fintech will continue to disrupt almost every industry as we know it. Sectors who embraced fintech as early-adopters see a continued digital payment maturity as the market settles down, but those who were late to the party will have some ground to gain. As consumers continue to demand friction free transactions the key to capturing payments to drive will lie in offering the most convenient options possible. This isn’t the last we’ve heard of fintech, not by a long way.
Dave Yohe, VP of Marketing, BillingTree
With over 26 years experience in marketing and advertising, Dave Yohe heads up BillingTree’s corporate marketing team. Responsibilities include Marketing, Lead Generation, Advertising, Tradeshows, Public Relations, Marcom, and Branding. Additional focus is spent on Analyst Relations and New Market Penetration.
Dave joined BillingTree in February 2010 after a multi-year leadership role with online fraud detection and prevention firm the 41st Parameter. Dave has also successfully led marketing teams for Infusionsoft and JDA Software, gaining over 15 years of Software Technology marketing experience within the Financial Services, Retail, e-commerce and CRM verticals.
He received a Bachelor of Arts from the University of Arizona.