The emerging payments landscape is evolving. While many businesses have embraced modernized payment solutions, emerging payment platforms remain less understood.
Payment platforms (rails) such as Real-Time Payments (RTP) and FedNow, along with modernized business-to-business payment solutions such as virtual cards and integrated payables (AP automation), are increasingly being adopted to streamline payment and financial workflows, and give companies greater control over cash management.
Newer platforms, such as stablecoins and tokenized deposits, are still relatively unfamiliar to many organizations. Their development has been driven by regulations set through the GENIUS Act, which created a regulatory framework for compliant payment stablecoins and enabled banks to issue tokenized deposits.
These platforms have the potential to offer businesses speed, improved liquidity, cost savings and operational efficiency. According to Josh Fogle, Senior Vice President, Director of Treasury Management at S&T Bank, as businesses increasingly seek real-time access to move money, emerging payments offer companies a strategic opportunity to differentiate themselves.
Smart Business spoke with Fogle about emerging payments and how they may fit into a company’s broader financial strategy.
What benefits do these payment platforms offer?
Emerging payment platforms offer speed, lower costs, enhanced data with each transfer, greater efficiency and improved liquidity. For many companies, reconciling payments remains time intensive. The ability to collect data alongside a payment and receive the payment in real time can minimize the financial operational burden. These capabilities also give businesses greater control over their payment processes, though the value for each organization depends heavily on use case and transaction type.
One of the primary benefits of stablecoins, for instance, is greater ease with cross-border payments. International payments can be expensive and slow. Stablecoins, by contrast, enable a real-time settlement with greater transparency and more detailed data.
Another driver is cost to accept credit cards. Processing credit card payments can impact profitability. One of the value propositions of emerging payments is that they avoid the existing card networks all together. As adoption grows, there is increasing expectation that lower-cost emerging payment methods will likely challenge the traditional credit card model.
These payment options introduce the opportunity for new thinking around payment terms. Standard buyer discount structures such as 2/10 net 30 payment terms have long been the norm. With faster, more efficient payment platforms, companies could introduce additional payment term layers and offer discounts for customers who use emerging payments. This payment method will settle quicker and is easier to post, therefore the supplier could pass along a larger discount for early payment. For suppliers, this optimizes working capital and is more cost effective. For payers, it creates tangible economic benefits tied directly to payment behavior.
What should businesses consider before moving into an emerging payments platform?
Companies should take a strategic approach to adoption. Working with a banker to examine existing workflows and the cash conversion cycle can help identify inefficiencies and determine where emerging payments could deliver meaningful ROI.
Businesses should engage suppliers and customers to assess willingness to accept new payment methods and identify where leverage or mutual benefit exists. Emerging payments require alignment with both parties — the sender must have access to send, and the receiver must have the ability to accept.
Few institutions currently offer full-send capabilities across all instant payment methods. As a result, adoption remains uneven, reinforcing the need for education and careful planning.
While emerging payments are still evolving, they represent a fundamental shift in how money will move in the future. Businesses interested in exploring these options should partner with their banker to understand which, if any, solutions align with their strategy, risk tolerance and operational needs. ●
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