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Digital Payments Reach $6.7 Trillion in B2B Transactions

Globalization has removed several barriers for companies to conduct business abroad. However, exposure to foreign exchanges remains a challenge. The fees involved in international money transactions can make the process onerous, particularly to small organizations that lack financial expertise.

Meanwhile, incumbent banks have typically been resistant to re-invest in new technologies within the business-to-business (B2B) payment sector. However, they now face new competition from non-bank start-ups that offer less-expensive services by using automated processes, reducing the need for intermediaries.

Digital Payments Market Development

According to the latest worldwide market study by Juniper Research, B2B transactions processed by pureplay digital payment operators will reach $14 trillion by 2023 -- that's up from $6.7 trillion in 2018.

Juniper analysts found that traditional banks can struggle to quantify a return-on-investment from the implementation of digital technologies to replace or augment their existing methods. As a result, they are heavily reliant on manual processes and legacy IT suppliers.

Conversely, new entrants -- such as Modulr and Soldo -- have entered the digital payments space without the burden of legacy systems. They use innovative real-time payments technology that integrates with their customer's accounting software, thereby reducing the costs involved.

In their latest research, Juniper assessed 15 vendors; comparing the relative level of their capabilities and offerings in the digital payments sector. According to Juniper, the five leading vendors include ACI Universal Payments, FIS, VocaLink Mastercard,  Fiserv and Finastra.

First-ranked ACI Universal Payments recently acquired SpeedPay, a U.S. bill payments company, from Western Union and post-integration will augment its portfolio with financial payments direct to customers.

The research found that established financial services firms are already seeking ways to redress the balance through remedial measures -- citing the ongoing implementation of SWIFT gpi, a new standard for cross-border payments, as a key innovation.

Outlook for Digital Payments Application Growth

Juniper also concluded that in the medium term, measures such as SWIFT gpi Link, which is currently at the proof of concept stage, will reduce systemic inefficiencies and improve eCommerce transparency by using blockchain platforms to initiate and complete online transactions.

According to the Juniper assessment, banks are increasingly likely to introduce digital currencies, equivalent in value to, and redeemable in, fiat currencies, to accelerate the processes.

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