How Instant Payments Can Accelerate B2B Payments Modernization

The B2B payments market is a large segment of the U.S. payments industry, with transactions reaching an estimated $35.8 trillion in 2024, according to eMarketer. As the vast B2B payments market continues to expand, a pronounced shift toward electronic payments on the consumer side has begun to carry over. But digitization has not yet fully taken over: Nearly one-third (32%) of 2024 B2B transaction volume was transacted via cash and check, per eMarketer, creating considerable opportunity to modernize the space. 

Community banks have the opportunity to provide new payment offerings to help businesses move to a more automated payments experience. 

The B2B Payments Landscape 

A Federal Reserve Financial Services (FRFS) survey found that in 2024, 73% of businesses sent or received checks from other businesses, employees, consumers or government agencies. For businesses, checks have numerous upsides, but they are also imperfect. Businesses must weigh the pain points against the advantage that checks can provide as they evaluate and invest in their payment offerings. 
 
Electronic payment methods are not far behind with around half encouraging the use of methods like credit card and ACH, per the FRFS survey. Seventy-one percent of businesses used ACH, and over 6 in 10 used credit or debit cards, per the FRFS survey. 
 
Instant payments—the newest form of electronic offerings—can accelerate transaction times from days to seconds and resolve pain points. And businesses are taking note: 16% of businesses surveyed are already using instant payments, and 66% said they are likely to do so if offered by their primary financial institution. 
 
Emerging Instant B2B Use Cases  
 
According to the FRFS survey, use cases businesses are prioritizing include: 

• Bills and invoices. Businesses are interested in using instant methods for recurring (34%) and non-recurring (20%) bills and invoices.  

• Request for payment. Over a fifth (22%) showed interest in request for payment, a significant increase over 2023.  

• Just-in-time payments. Nearly one-third (29%) are prioritizing just-in-time payments.  

Overcoming barriers  

To deploy these use cases, businesses must get on board with adopting instant payments. Even though there’s clear interest, obstacles remain: Many businesses are concerned about the costs of implementing and using instant payment systems (53%), sharing bank account information (38%) or experiencing fraud (36%), per the FRFS survey.  

But there are ways to combat these barriers. Some growth will come organically as instant payments become more established broadly. Factors businesses cited as potential adoption enablers include growing demand from trading partners (76%), greater network reach (73%) and the offering becoming a competitive requirement (72%), according to the FRFS survey. Increased demand will create more usage opportunities and ultimately generate wider reach, in turn bringing more businesses onto the network through their financial institutions and other partners.  

Banks can leverage this opportunity to improve their relationships with customers. Businesses noted that they’d feel more compelled to adopt if they viewed instant payments as a standard offering from their bank or service provider (75%). 

Learn More 

Download the Federal Reserve Financial Services’ white paper “How instant payments can accelerate B2B payments modernization”.