Originally posted on MobilePaymentsToday.com.
Consumer-facing industries like fashion and electronics have
long led the payments innovation game. Large investments in
technology and talent over the past decade have brought
about mobile wallets, “invisible” payments, one-click checkout, and other advancements
that make the consumer buying experience truly
Meanwhile, business-to-business merchants lag behind, still
trapped beneath outdated systems, analog processes and an “if
it isn’t broken, don’t fix it” attitude that has prevented
major technological transformation.
B2B businesses are typically older, running on what they know
and what’s come before them. As a result, the $6.7 trillion B2B e-commerce
opportunity remains largely untapped – and payments represent
an important part of that untouched territory. As the final
step in every purchase, the payment experience is a crucial
component of the customer experience and, by extension, digital
commerce’s multi-trillion-dollar potential. B2B payments is the
next innovation frontier, and now is the time for technology
providers and merchants alike to seize the opportunity.
Tackle the B2B payments beast
Why has it taken B2B payments so long to adapt to the digital
age? The B2B money transfer market is tough to crack.
Technology providers need proven regulatory records, sound
security practices and strong balance sheets in order to win
over B2B merchants – a group that, generally speaking, is
already resistant to technological change.
Many B2B businesses still rely on their sales representatives
to negotiate complex quotes, manage customer-specific pricing
and cultivate ongoing relationships. While companies may be
afraid of damaging relationships with long-time customers and
trusted channel partners, the old-school account representative
model drags out the purchase process and doesn’t suit the
habits of the modern customer. This is particularly true for
merchants who sell in bulk, offer thousands of SKUs or
distribute across multiple country borders.
As with any industry, customers want convenience, accuracy and
speed. This means a streamlined checkout process that doesn’t
require dialing a phone number to check the status of an order
or to purchase.
In addition to enabling experiences that imitate the
convenience and speed of the B2C world, the most revolutionary
B2B payment breakthroughs will be the ones that effectively
manage debt. The high-volume nature of B2B commerce demands
flexible payment terms, including the ability to pay later.
While small firms are increasingly using business credit cards,
larger enterprises still use checks and typically require
suppliers to issue a purchase order, which involves a series of
approvals and other steps to complete the transaction.
The process of extending lines of credit or offering purchase
orders is excruciatingly manual – not to mention
resource-intensive for the merchant, from continually tracking
credit standing to identifying and preventing transactions when
purchase order limits have been exceeded. The next wave of
payment providers will automate these B2B-specific buying
processes to save companies money, time and resources and even
out cash flow. It’s no easy task, but it’s a change that the
market desperately needs.
Seize the opportunity
B2B customers are consumers, too. In today’s B2B crowded
marketplace, buyers demand a simple, intuitive online
experience that mirrors the interactions they have with their
favorite B2C brands. Merchants who cannot meet today’s
fast-paced digital demands will quickly lose out to
That’s why the B2B transformation needs to happen now – and the
good news is it’s already beginning.
According to Forrester, 70 percent of e-commerce professionals
plan to increase their technology budgets in the coming years,
a strong recognition of the power of digital and delivering
experiences that customers want. Investors are similarly waking
up to the opportunity, evidenced by recent venture funding for
B2B-focused startups like credit platform Apruve, payment cycle
management Billtrust and cross-border provider Payoneer. In
fact, four of the top 10 fintech investment
deals in Q2 of this year landed in the B2B market.
B2B merchants must think of digital commerce as not only an
opportunity, but a strategic imperative to ensure survival. It
will be up to payments providers, technology vendors and banks
to commit the same energy they have long devoted to B2C and
inspire merchants to get on board. The payments revolution is
well underway, and it’s time for B2B to join the movement.