WWhen the pandemic ended face-to-face operations in Fairfield and Westchester counties (and around the world), many entities, from franchises and municipalities to manufacturers and businesses, large and small, were faced with this question:

“How do I process payments now that I am working remotely?”

The situation served as a wake-up call to those who had not invested in digital payment solutions. In fact, 76% of small business executives say the pandemic has prompted them to become more digital, and 82% have changed the way their business sends and receives payments, according to a study by Mastercard.

As a result, banks, including Webster, have seen double-digit growth in demands for digital capabilities, such as online and mobile banking, commercial bill payments, instant payments (ACH or wire transfer), and even bank transfers. digital websites designed for payments.

This change brought challenges. Still, businesses are finding that the benefits (e.g., consumer demand, greater predictability of cash flow, the flexibility to run operations from anywhere, and better access to customer / business data) outweigh the cons (eg legacy technology and workflow redesign).

Even now, a number of trends continue to influence demand and adoption.

Advance instant payments
In 2020, the need for cash has accelerated the growth of instant payments. Not only have contactless apps and other technologies helped limit the spread of the coronavirus, they’ve also enabled businesses to process payments within seconds. At any time, they can now more accurately predict and manage their cash flow.

Businesses and consumers alike seek instant payments for more than payroll and supplier payments. For example, instant payments are now used for legal and insurance settlements, especially during a natural disaster. They’re also used to reimburse friends and family when a dinner check is split, or for other expenses, like medical bills, point-of-sale transactions, and traditional bill payments. As consumers become more familiar with the use of instant payments for personal use, the demand is likely to drive the use by more businesses.

Same day volume growth
Same-day ACH volume increased 88.2% between Q1 2020 and Q1 2021, from $ 80.5 billion to $ 187.6 billion, according to the National Automated Clearing House Association (NACHA). of dollars. As more and more individuals turn to forms of employment that allow greater flexibility and control over their schedules, the trend has created increased demand for companies to pay wages on a daily basis. During the first quarter of 2021, it also boosted same-day payment activity for various transactions.

The search for payable and admissible solutions
Access to payables and receivables so treasury and payments departments can conduct their business remotely while still getting timely reports was critical in the context of Covid-19 quarantines. However, it also resulted in cost savings and other efficiencies over processing paper checks. As the volume of checks continues to decline, secure locker solutions are still widely used. Payments are sent to a central post office box in your bank where they are collected, processed, and deposited to your account – all on the same day, reducing time and increasing cash flow.

The ongoing migration of checks to ACH also continued as B2B ACH climbed more than 17% to $ 1.2 billion in the first quarter. As more businesses continue to convert paper invoicing to digital solutions, not only do customers have the ability to pay their invoices online, but businesses also have the ability to automatically download payments into their system and upload them to their systems. employees have the flexibility to manage it all from home.

More sophisticated cyber fraud
The pandemic has not only led to an increase in cyber attacks, but also to an increase in their sophistication as more and more people do business online. It is therefore essential that business leaders focus on ways to improve security, educate staff and mitigate threats. Some of the key steps to take now: make sure activities are protected against a wider range of cybercrimes, such as financial account takeovers, email compromises, breaches on virtual meeting platforms, and unauthorized Wi-Fi access.

Whether or not to accept cryptocurrency
While demand is low, cryptocurrency and tokenization, like Bitcoin, are worth watching. FedNow, a new real-time settlement service expected from the Federal Reserve in 2023/24, will allow individuals and businesses to send instant payments 24/7 through their bank accounts. Since the Fed sets overall monetary policy, whether and how it treats cryptocurrency could impact how businesses view this form of digital “cash”.

Digital payments offer the opportunity to streamline operations. Think about how to leverage it as your business grows.

The opinions expressed are those of the author and not of Webster Bank NA. They are not intended to provide financial advice or any other professional advice. Consult a professional regarding your individual situation.

Phil Picillo, senior vice president, director of treasury and payment solutions at Webster Bank has witnessed the shift to digital payment solutions. He is a member of the board of directors of NACHA, which governs the ACH Network payment system.