In a global survey conducted with Mastercard in 2024, one core challenge we identified was:"Payment challenges faced by suppliers"—namely, how payment delays trigger cash flow issues. In a highly volatile supply chain environment, businesses of all sizes may encounter significant difficulties when managing payments across jurisdictions, especially with longer payment cycles.

The most innovative trend in the payment landscape today is undoubtedly the acceleration of automation within digital payment systems. The Payment Factory is the first step toward automation. Although it will take years to mature, programmable payments—where transactions and processes are automatically executed based on preset rules—are already on the horizon. Companies that have already digitized through a payment factory layout are well-prepared for the next (r)evolution.

To facilitate programmable payments, smart contracts and blockchain technology are used to automatically execute transactions based on preset rules. Issuers can directly specify terms in the store of value (i.e., assets that maintain value rather than depreciate) by "programming" rules and conditions. Once preset conditions are met, programmable payments are triggered automatically.

The aforementioned smart contracts are central to achieving this goal. Smart contracts are self-executing contracts whose terms are directly written into code, thereby reducing the need for intermediaries such as banks or brokers. Additionally, virtual cards (unique digital cards used for online payments, typically linked to a physical bank account or credit card) and the growing application of artificial intelligence (AI) in process automation, fraud detection, and real-time decision-making are equally crucial.5。

When these technologies are combined, they have the potential to revolutionize payment methods, building an ecosystem where payments are faster, more secure, and easier to manage.

Digital payment rails in automated payment workflows

As customer interest in fast payment options grows, businesses may face increasing pressure to offer such services.A record 92% of U.S. consumersused some form of digital payment in the past year. Meanwhile, according to theMcKinsey Global Payments Report 2024, instant payment transaction volumes in the EU are expected to grow from €3 billion in 2024 to €30 billion by 2028, with an average annual growth rate of 50%.

Next-generation digital payment rails are designed to meet specific needs in modern automated payment workflows. Stablecoins offer price stability and cross-border efficiency, helping maintain consistency in purchasing power, and their near-instant settlement times enable automated payments to be completed in real time, thereby enhancing supply chain efficiency.

Meanwhile, central bank digital currencies (CBDCs) bring government-backed trust and regulatory compliance. This enhances confidence in their peg to traditional fiat currencies and value maintenance, contributing to financial stability. Consequently, automated payments are expected to be applied in areas such as government payments, payroll, or the public sector.

Virtual cards are particularly helpful for businesses and consumers to control recurring automated payments, including subscription services or one-time payments (such as in e-commerce scenarios), while businesses can achieve expense control by issuing virtual cards with preset limits.

Rebecca Meeker, Senior Vice President of B2B Partnerships at Mastercard, stated in the aforementioned survey report: "Many people still view virtual cards as a digital form of physical cards, with temporary, randomly generated 16-digit numbers, without fully considering the broad opportunities they offer." She added: "But if we shift our mindset and view virtual cards as assets, buyers can begin to leverage them to manage cash balances, obtain working capital credit lines, or explore financing opportunities."

Taken together, these new solutions aim to achieve more efficient, more automated, and more compliant payment processes. If used properly, they can help businesses and individuals transact seamlessly in an evolving digital economy.

How SAP provides solutions

For businesses looking to reduce costs, enhance control, and mitigate operational risks through digital-first payment solutions,SAP is at the forefront of providing flexible, secure, and scalable solutions.。

With SAP S/4HANA Cloud Advanced Payment Management, businesses can centralize payment processing and monitoring, establish in-house bank functionality, and, combined with SAP Multi-Bank Connectivity, ensure secure and efficient connectivity between SAP systems and banks.

Key advantages include:

  • Centralized payment processing: Supports group-wide approvals, payment monitoring, and cash management.
  • In-house bank functionality: Supports intercompany payments, payments on behalf of subsidiaries, and central collections.
  • Seamless integration: Integrates payment factory and in-house cash functions into one solution, connecting hundreds of banks, minimizing integration efforts, and streamlining the overall payment process.
  • Enhanced visibility and control: Provides full visibility into payment processes and cash flow, enabling better control and decision-making.

SAP's payment solutions offer real-time visibility into transactions, ensure seamless compliance, and present opportunities for cost savings and risk minimization. At the same time, they lay a solid foundation for any payment innovation, including programmable payments.

To learn how next-generation payment technologies, from embedded finance to autonomous treasury management, are transforming the finance landscape, refer to the latest e-book from SAP Taulia. Get ahead of the curve anddownload now！