B2B payment structures have been thrown into flux by recent developments in transaction technology. Most notably, blockchain algorithms offer a safe and efficient way of trading goods and their recent rise in popularity speaks to their viability in this space going forward.
Blockchain algorithms supplant the role of a central bank or government backing to support the virtual coins that they create. This technology has been a rapidly expanding field for major corporations, especially B2B distributors. A 2018 study found 82 of the Fortune 100 companies have begun researching or investing money into blockchain technology. Mastercard, Visa, and J.P. Morgan have launched blockchain networks to ease B2B transactions, especially cross-border payments. With the technology becoming more available, let’s dive into the benefits of blockchain technology for B2B distributors.
Blockchain lends itself to distribution because it is uniquely capable of integrating different supply chains into one service. This ability increases efficiency, allows for greater collaboration, and makes correcting issues in the system easier than ever. Blockchain has particularly high potential for distributors in the near future. By connecting all parts of the supply network, a blockchain system, according to Forbes contributor Larry Myler, “engages new realities like the expanding data flows presented by the Internet of Things (IoT).” With companies forced to satisfy a greater number of supply streams, blockchain will be vital in making the process more efficient.
A more reliable supply chain
Blockchain technology helps both the customer satisfaction and the bottom line of any B2B distributor. According to an article in Food Ingredients First, the interconnectedness of the platform is able to, “provide better transparency and provenance to the participants, so one can know where the food, the vaccines, the electronics, and even the components into the electronics are coming from.” This transparency allows the distributor to better track its own shipments and analyze where gaps in the supply chain may be, which leads to a better experience for downstream customers. For example, in an experiment carried out by IBM and Walmart, IT specialists working with blockchain technology were able to locate a single package of sliced mangoes from a group of thousands shipped to multiple stores.
This ability could have massive implications for food safety and product quality in general going forward. From the payment side, blockchain can go a long way in limiting fraud, because payment data can easily be verified. These two capabilities allow a B2B distributor to rest easy at night knowing that their supply chain is more transparent than ever and mistakes can be corrected immediately.
Ease of payment
Blockchain creates an easier payment process by cutting out the middleman. As Myler says, the system benefits B2B payment by, “easing and escalating the speed of financial transactions, blockchain replaces banks, credit card processing and checking. This reduces cost to B2B vendors and customers.” This payment option creates a web of interconnected users that would be similar to a PayPal for the B2B landscape. When this benefit is brought to the table, it makes complete sense why credit card companies and major banks are investing in blockchain technology.
Blockchain is an emerging technology in B2B distribution that could completely revolutionize the payment process and make the supply chain more transparent. Distributors who are proactive in planning for this technology will be able to take advantage of the opportunities that are already being developed.
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