Name: Global Payments CEO: Digitization of B2B payments is the new normal
Uploaded: 2022-09-27
Duration: 7 min 20 s
Description: Jeff Sloan says this $125 trillion market is 'an enormous opportunity for us'

Jeff Sloan says this $125 trillion market is "an enormous opportunity for us"

Global Payments CEO: Digitization of B2B  payments is the new normal 

Leadership

Global Payments CEO: New normal is B2B payments digitization

Jeff. So good to see you again to talk about global payments. You know, for the past few years you've been talking up the importance of digital payments and surprisingly consumers have adopted these very comfortably whether talking about mobile payments, QR codes, contact with payments and your company has enabled that technology. Now you're saying the next big growth area is B two B. Business to business digital transactions. Why is this the next big growth spurt? I think the next stage of evolution is to attack, that's actually a $125 trillion market annually globally and much like the consumer business many decades ago. Most people don't know that half the volume today in business to business, which is businesses paying other businesses is actually done today by check and most of the rest of it is done via a ch is relatively low digital and card penetration into the B two B segment. Yet the growth is fantastic. Why have businesses been so slow to automate and digitize? It's hard to believe that they're making payments in paper checks. It's one of those things that's a mystery to everybody. But what I would say is much like cash and check in the consumer economy, I think um that recent experience has taught us that the more comfortable people are with technology and using digital means of payment, the more efficient they can be both on paying out or paying their own bills as well as I'm paying in and getting their own invoices paid. And what's the big expense that here is it speed, is it cost savings for businesses. The first thing I'd say susie is you can actually be much more efficient paying things digitally. So for example, you can get paid more quickly. You don't need as much staff dedicated to payables management as you do in the in the analog world. The second thing is the extent that you use virtual cards. So cards as a means of actually getting your payables paid. Those are funds good meaning that once the transaction is authorized, you know, you're gonna get paid and you're not worried about the check being lost in the mail or the check bouncing. And the last thing I'd say is we're all trained as on the consumer side when we get an invoice, the email via pdf to pay it. So instead of snail mail and dropping your bills on the inside of B two B and when you get paid until somebody does or does not get the mail, you can actually get paid digitally electronically. Which is obviously a lot more efficient than it is via snail mail. What does this mean for your business? Global payments, How transformative it will be to be is one of the largest markets that were chasing in 100 $25 trillion of value. If you compare it to our Corbett, the consumer market, it's four times the size. So it's an enormous opportunity for us if you're asking me where we are in 5 to 10 years, I think that we have to be one of the largest players in the world in B. Two B. Now, the other big trend that you have been talking about is buy now pay later payment options or what people call B. N. P. L. I mean this is an installment plan. They've been around for years. So why is this new digital version so popular? I call it lay away when I was actually in grade school. This is how I bought my first bowling ball by putting a dollar away every week for a year until christmas. So it has been around for a long time. Having said that though, what I think is different from a consumer point of view is the amount of technology that's gone into product development to allow you to shop when you're on the website when you're at the point of purchase and after you're purchasing is really innovative. But at the end of the day, if you take a step back, it's really no different than installment lending. And what we're doing a global payments is powering financial neo banks, Fintech startups to provide the same kind of customer service that our people are used to. The more traditional bank card environment. I'm sure you've seen the reports showing that delinquencies are up for these be NPL payments and higher than what they are for credit cards. To what extent could the credit problems of the customers become a problem for global payments. What's important for us is that we only do B. M. P. L. And services like that in a regulated response. So the way we're approaching the NPL Suzy is we're doing it through financial institutions which are already regulated. Have know your customer have a male responsibilities and that gives us a lot of comfort that we're using global payments, name and brand in an appropriate way. So you're not getting involved in checking the credit worthiness of the borrowers. We don't take any balance sheet risk in B. M. P. L. Or otherwise. Let's talk a little bit now about the economy and the business environment. You have a special perspective money flows in the economy. So from what you're seeing, do you see a recession coming? Well we certainly don't, in my opinion have won today. There's two reasons I believe that the first is in our volume. So what we announced a couple of weeks ago is that through july and august of 2022 our volumes are right in line with our expectations are very consistent with the data that you've seen from these Mastercard. So so far we haven't seen it. The second thing I would say is I've been on a bit of a world tour as I've gone back out to many of our markets um in in europe in particular but also here in north America and for those of you in new york but also around the world. The hotels are packed, the airlines are packed, the restaurants are packed. You can see it, you don't need me to tell you that things are good. I think that will persist susie at least through the end of the third quarter. It's harder to see with a crystal ball where we are in the fourth quarter and the first part of next year. But sitting here today we feel really good about the strength of our business through the end of the quarter. Well holiday shopping is sometimes a good indicator of the the the economy when you're looking at the outlook for holiday shopping, what's your take on that? I would say right now as I think you've heard from large financial institutions throughout North America, the consumers in a very healthy place from a savings point of view. The consumers in a very healthy place from a spending point of view and I think the pent up demand in terms of travel and you're hearing this from the airlines in terms of people booking tickets today for the holiday season is very good. So sitting here today we don't want no reason to expect that things are any different to the holiday season than they are today. To what extent are some of these retailers coming to you to help them add more technology solutions so that they can save money and be more efficient. Are you seeing that happening? One thing I would say more recently about the advent of digitization, our businesses, consumers don't see a distinction between shopping on their phone, shopping in a physical store stores, shopping online shopping at the at the market and like so as a result they've come to expect an incredibly high level of service. One thing that gives really confident, but I look at the next 69 or 12 months is our rate of bookings and our new sales and our sale of new technologies especially in digitization is proceeding at a record pace As a result, I feel really good about where we are and where our customers are. Sounds like things are going really well for global payments but looking ahead beyond the holidays, what's your outlook for 2023? You've been reporting strong financial results all year. Do you see that momentum continuing into the new year? Well, we have record Results at the end of 21. We wreck results for each of the first two quarters. In 22 we're forecasting more of the same for the third quarter and the year. I expect that to continue into 23. So I'm very optimistic longer term about where the company is and where it's heading our new sales numbers are fantastic. Our existing revenue targets and our current financials are exceptional. So I feel good about where we are good about where we are. That doesn't mean that there will be a straight line path upwards in everything that we're doing. But I do feel really good about the health of the business.