Start-ups and established companies
alike are increasingly interested in the
industrial internet of things (IoT),
but many are missing a trick when it comes to payments. Businesses face many
challenges when designing and implementing their own IoT payments solutions,
most notably serious security risks and a lack of interoperability - and
just one slip up could have a serious impact on a business.
So why risk it?
Traditional industries, like manufacturing, have the highest growth
potential for IoT payments[1]. These sectors continue to rely on outdated,
inefficient and insecure ways to manage their finances, so are ripe for an
overhaul[2]. The immediately obvious benefits are operational. Specific stock
levels, for example, could be set to trigger alerts in smart factories that
tell the system to not just order more of those components from their
supplier, but to automatically pay for them.
Automating payments increases efficiency by freeing up resources. Time
intensive (and tedious) paperwork associated with procurement, such as
invoice reconciliation, call-off delivery notes and future batch ordering,
can be processed with minimal human intervention and maximum accuracy.
There’s also improved operational visibility. When using an integrated,
stakeholder agnostic payments platform, digital payment issuance and
acceptance is simplified and data about past and incoming transactions can
be captured, stored and processed in real-time. This increases payment
flexibility and reduces the cost of transactions.
Going beyond operations, there are strategic benefits to improving
industrial payments processes too. Late payments continue to be a major
issue for businesses around the world, with one in ten invoices being paid
late at a cost of $3 trillion a year[3]. Moving away from traditional
invoicing methods to automated digital supply chain payments ensures that
transactions are processed quickly and on time – improving buyer-supplier
relationships.
Done right, IoT payments can add significant strategic and operational value
to a business. As more and more companies identify these benefits, many are
diving in at the deep end and rushing to build their own industrial IoT
payments systems, thinking it will bring them competitive advantage. In
fact, this is more likely to bring about their downfall.
Flying solo on security
Complying with continuously evolving industry regulations such as Payment
Card Industry Data Security Standard (PCI-DSS) is crucial for merchants.
Unless their payment systems are up to standard, they risk data breaches and
fraud which can do irreparable damage to their brand and buyer relationships
– not to mention heavy fines.
Compliance with these ever-changing regulations, however, is complex and
expensive for businesses to achieve and maintain, requiring extensive
penetration testing, hours of skilled developer time and ongoing changes to
internal payment infrastructure. But as data breaches continue to cause
national security concerns in the U.K. and across the world[4], such as those
that have led one of the world’s leading communications services companies
to remove equipment from Chinese telecoms giants, Huawei, after concerns
were raised about the Chinese firm’s presence in critical telecoms
infrastructure[5], it’s simply not worth the risk. Instead, integrating an
independent stakeholder agnostic payments platform that meets these
requirements, and, crucially, accepts responsibility for maintaining them,
significantly minimises these risks.
Interoperable IoT payments with baked-in security also enable merchants to
strengthen their client offering in two key ways. First, best of breed
systems combine end-to-end data encryption with tokenization, replacing
sensitive data with meaningless information. This reassures buyers that even
if their payment information is intercepted, it is indecipherable, and
therefore worthless.
Second, by placing the burden of payments interoperability on an independent
platform provider, companies can scale quickly. Agnostic platforms enable
acceptance of a large variety of payment methods, from credit and debit
cards to Level 3 Purchasing Cards (Pcard) and even alternative payment methods (APMs). This
means that suppliers can work with more buyers, regardless of these clients’
payments infrastructures, instead of doing business with only a tiny
fraction of the overall market.
In a better-connected world, why go alone?
It’s clear that a connected payments network can improve financial
processes. That’s why more buyers are looking for innovative ways of paying
their suppliers, as evidenced by the rise in tender documents enquiring
about supplier payment acceptance. But for B2B merchants, ensuring they are
accepting IoT payments as quickly, cost-effectively and securely as possible
is a tricky path to navigate alone.
Before suppliers risk data breaches and operational inefficiency by creating
an IoT payments solution from scratch, they should consider what is already
out there. Tried and tested third-party payment platforms can bridge the gap
between buyers and suppliers, reducing costs, improving efficiency and
enhancing corporate relationships.
3-Placeholder Text https://www.sage.com/en-gb/news/press-releases/2017/12/half-of-uk-small-and-medium-businesses-expect-to-suffer-impact-of-late-payment-this-christmas/
4-https://www.cnbc.com/2018/12/04/uk-spy-chief-raises-questions-over-chinas-5g-rollout.html
