Bottomline, in their annual Business Payments Barometer report, reveals that finance leaders in Great Britain and the United States are facing a tough operating environment, with over 80% of businesses (82% in GB and 88% in the US) forced to accept new payment methods in the last 12 months.
Financial decision-makers are also continuing to tackle a rise in fraudulent activity, as 39% of GB and 35% of US businesses experienced payments fraud over the last year.
The findings stem from the eighth annual Business Payments Barometer research, which interviewed 1,600 financial decision makers in the US and GB, across a range of business sizes and industries.
“Rising inflation, economic fluctuations, geopolitical tensions and rapid technology shifts have created a challenging operating environment that many finance leaders may not have faced before,” said Craig Saks, President and CEO, Bottomline.
“The research results show that many businesses are finding it difficult to navigate this new operating environment and are having to manage an array of different payment demands from their customers, while tackling ever-rising fraud at the same time.
So, it is critical that all of us within the financial services community work together to help companies to successfully manage and thrive in this new landscape.”
A rapidly changing payments landscape
2023’s Business Payments Barometer illustrates that both GB and US businesses have ranked “keeping up to date with new payment technologies,” such as cloud payment solutions and pay-as-you-go technologies, as the biggest driver of change in their payments processes in the coming year.
This trend continues to be driven by the rapid adoption of new technologies that exploded during the pandemic.
In GB specifically, businesses are embracing mobile payments more and more, particularly larger businesses, with 42% starting to offer them as part of their payments mix in the past 12 months.
Additionally, more companies in GB have started using new payment methods such as Request to Pay (Open Banking PISP) and instalment plans/deferred payments.
In the US, traditional payment methods remain strong, but 20% of companies stopped accepting cash, and larger companies are embracing newer payments, such as direct debits via ACH (35%) and mobile payments (41%).
Despite the rise of new payments accepted, most finance leaders are still dropping certain payment options, with seven in 10 businesses in GB (74%) and the US (72%) becoming stricter about the payment methods they accept.
This is particularly the case in the US for enterprises (82%) and large companies (80%) but is less so among small (54%) businesses.
When it comes to understanding new payment initiatives and upcoming regulations in GB, businesses continue to show a limited understanding. Levels of familiarity are virtually the same for all the initiatives mentioned in the survey.
Only 54% know at least a fair amount about Open Banking/Payment Services Directive 2 (PSD2), 50% about UK New Payments Architecture (NPA), 56% about new overlay services, and 53% about adoption of ISO 20022 formats.
Awareness of new payments initiatives is higher in the US, as seven in 10 respondents claim to have some familiarity with real-time payments (72%) and Open Banking (68%), and around six in 10 know something about the adoption of ISO 20022 formats (62%) and the California Consumer Privacy Act (CCPA) (60%).
Financial fraud continues to rise
Globally, businesses continue to battle increasing waves of financial fraud, exacerbated by the hybrid working environment and enhanced payment technologies.
More GB businesses (39%) have been victims of payment fraud over the last year, with larger companies (46%) at more risk than small (32%) and medium size (36%) companies.
In the US, fraud levels have remained consistent with last year at 35%, but medium-sized companies saw a decrease in fraud (down from 42% to 30%), while enterprises reported an increase (up from 32% to 46%).
However, the value of those losses has increased by 21% on 2022, with enterprise companies hardest hit seeing an increase in the value of losses at 43% on last year.
When it comes to recovering losses, US companies fared a bit better than their GB counterparts and managed to recover 37% of losses due to fraud, compared to just 29% in GB.
In terms of business size, small businesses recovered the lowest proportion of losses (20%) in GB, and in the US, mid-sized companies (31%) recovered the smallest proportion.
“These figures paint a difficult picture for companies, who are clearly struggling to keep up with fraudsters whose tactics and methods are becoming more sophisticated by the day,” explains Omri Kletter, Global VP, Fraud and Financial Crime at Bottomline.
“However, to win the war on financial fraud, companies must adopt the latest technologies, including real-time fraud prevention tools like transaction and insider threat behaviour monitoring, otherwise criminals outside and inside the business will continue to get away with stealing significant amounts of money.”
Real-time payments go mainstream
Finally, real-time payments are gaining popularity in GB. In the past 12 months, companies of all sizes have embraced real-time payments, with adoption up from 48% to 55%.
Small businesses are also adopting real-time payments, with only 16% of small businesses stating that they have no plans to adopt them, down from 27% in 2022.
Visibly, companies in GB are starting to see true real-time payment rails as the smarter, faster and more efficient alternative to traditional payment methods.
In the US, adoption is difficult to gauge since true real-time payment rails were only introduced in 2017.
However, the adoption of real-time payments is likely to increase in the US in the future, with the introduction of the Federal Reserve’s real-time payment system, FedNow, launching this year.