B2B Payments

B2B eCommerce Gets Civilized

B2B on keypad

The first and oldest writings of human civilization were not poems or prayers: they were invoices. Transactions for livestock, spices, grain — the Sumerians began marking it all down in clay 5,500 years ago. We can imagine ancient traders in marketplaces awaiting payment, calling for “the end of clay” and cheering on disruptive new technologies like papyrus, quills and ink.

And here we are, millennia later, exploring space and streaming Netflix, yet over 40 percent of business-to-business (B2B) payments are still made by paper — the same “technology” that replaced clay tablets.

Unlike simpler more streamlined business-to-consumer (B2C) purchasing, B2B sellers still ship goods or extend services on the promise of being paid later on an unspecified date, usually months. In the February 2020 B2B eCommerce Report, done in collaboration with American Express, we learn how B2B buyers and sellers are using eCommerce to bypass outdated paper-based billing and payment terms.

Where’s the Trust?

The speed of payments relies at some point on the level of trust between parties. Despite being vulnerable to hackers, digital platforms and marketplaces offer secure spaces where known trading partners can transact electronically and instantly, accelerating both goods and funds.

China’s eCommerce titan Alibaba is capitalizing on that. Kivanc Onan, Alibaba North America head of B2B payments, financing and protection told PYMNTS that buyer-seller confidence is best achieved with delivery guarantees, fast dispute outcomes and lending services geared to helping small and medium-sized businesses (SMBs) settle up with sellers instantly online. That mix also contains offering payment method of choice — an increasingly decisive factor.

“The B2B buyer is rapidly evolving and becoming more sophisticated, and, in turn, expectations are shifting [toward purchasing] with their payments of choice,” Anjali Shah, director of client management for online merchants at American Express, told PYMNTS. “Price isn’t the only factor in their purchase decisions — convenience, customer service, and payment methods all influence this decision. For B2B companies to achieve long-term growth, investing in the technology that allows them to be more flexible with payment methods is imperative.”

Digital Dollars, Digital Dangers

By way of examples, the February 2020 B2B eCommerce Report profiles B2B event rental outfit CORT Events, where Director of Marketing Lilian Shen has catapulted the company out of legacy payments and into eCommerce transactions that settle faster. “Moving our business to the online space allows us to maximize our ability to serve our customers, reduces their downtime and allows us to provide them real-time updates to their needs,” Shen told PYMNTS.

Given the sheer common sense of moving paper payments into a near-real-time eCommerce ecosystem, we can expect the current steady flow to become a mass migration to digital. Those movements are being closely observed by cyber villains looking for their next big score. After all, B2B eCommerce will be a $1.1 trillion business this year — pure catnip to cybercrooks.

The antidote is secure systems that automate accounts payable, use artificial intelligence (AI) and machine learning to endlessly scan for threats while humans prioritize payments and (ideally) add some face time to thriving eCommerce relationships. The ultimate “KYC” is knowing your customers as people.

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NEW PYMNTS DATA: HOW WE SHOP – SEPTEMBER 2020 

The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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