Earlier this year, Coalition Greenwich surveyed commercial and corporate businesses globally about their mix of payments providers as well as key priorities when choosing where to allocate future business. Eighty percent of respondents report they are using at least one non-traditional or fintech payment provider. Adoption is highest among businesses in the industrials and financials sectors, where use of nonbank providers tops 85%.

Slightly more than half of all commercial users are employing PayPal, making it the most commonly cited nonbank provider among companies in the study, followed by American Express at 37%. After these two enterprises, the incidence rate of cited companies quickly falls off indicating a widely open competition amongst the rest of the nonbank payments providers.

“Even after the rapid uptake of their services over the past decade, nonbank and fintech providers still have runway for growth,” says Chris McDonnell, Head of Digital Benchmarking at Coalition Greenwich. “Over half of businesses currently not using non-traditional providers are open to using them for payments in the future.”

Currently, traditional providers capture about 60% of payments and receivables flow, with alternative payments rails processing the remaining 40% and within the next five years, respondents expect their flow of payments and receivables will be split between traditional and nonbank providers.

The surging number of nonbank payment services is driven by price. Over the past year, cost has been among the top considerations that also include fraud prevention, service and speed as the key factors in driving companies’ selection of payments providers.

“At the same time, nonbanks and fintechs are delivering on many of the other factors that are important to companies, like quality of the digital interface, platform integration and analytics,” says Amos Welder, Senior Relationship Manager at Coalition Greenwich.

On Payments, Don’t Count Banks Out
Even as alternative payment providers catch on among commercial users, traditional bank providers are wooing clients by upping their technology game and integrating their broad capabilities and expertise.

“We have observed market leaders like Bank of America and J.P. Morgan deploying next generation capabilities that effectively counter technology advances by the non-regulated players,” says Amos Welder. “We view the record number of acquisitions and mergers over the last 1-2 years of midsize regional banks as an indicator of a growing intention to redeploy resources towards technology in order to compete with the large banks and fintechs.”