Connecting The B2B Payments Dots For The Age Of Digital Marketplaces

Digital B2B Payments

For years, the B2B ecosystem has mulled the potential for businesses to trade and transact online. It sprouted the discussion about an Amazon-like experience for corporate buyers to source products and services — and pay for them — in a digital user interface, much as they do in the world of B2C eCommerce.

With enterprise digitization accelerating, much of this thinking has turned into doing, and more B2B marketplaces are emerging to satiate businesses’ growing demand for such an experience.

But when it comes to the evolution of B2B eCommerce (and B2B payments within that ecosystem), where does mirroring the B2C experience end, and where does developing the unique B2B experience begin?

Speaking with PYMNTS about this industry shift, Bar Geron, founder and CEO of Balance, said that when it comes to the B2B customer experience, there are no limits as to how seamless, integrated and optimized it can be. But in order for B2B transactions themselves to fit in that environment, payments must blur the lines with finance, and must embrace technological collaboration for a seller experience retrofitted for the B2B supplier.

The Checkout Bottleneck

With B2B payments innovation proliferating, new FinTechs continue to surface, tackling no shortage of pain points for buyers and sellers. What’s missing, said Geron, is a solution designed specifically for the B2B eCommerce and digital marketplace platforms.

“There are different companies trying to do different things, but there is no company owning the B2B checkout experience,” he said.

This is where the parallels to the B2C online shopping ecosystem can falter. B2B eCommerce platforms can attempt to mimic the consumer experience at checkout, but will undoubtedly face a roadblock once they recognize that a mere 10 percent of transactions occur via credit card. The rest happen offline, creating a bottleneck, noted Geron.

When the nuances of B2B transactions — payment terms, purchase orders, invoices, varying payment methods, custom quotes and pricing, and more — are taken into account, translating the B2C experience for B2B digital checkout becomes a non-starter. The result is a massive headache for sellers, who must manage and reconcile payments coming from all avenues.

“The [sellers’] problem is that getting paid is really, really hard,” Geron noted. “Getting paid is really painful.”

Connecting The Dots

This is where FinTech and B2B payment innovators must diverge from the B2C path. For Balance, that means blurring the lines between payments and finance in order to maintain the positive user experience on the payer side of a transaction, while optimizing receivables for the seller.

The company offers a financing tool that allows buyers to pay for items at checkout in a streamlined, personalized way. Balance then finances the seller, getting them paid more quickly while offering a range of ancillary services, including invoicing, payment requests, reconciliation and more.

This merging of payments and finance is a growing trend in B2B payments, and one that reflects a challenging truth of the segment. Even if a B2B payments technology were created that can address most of the needs of both buyers and sellers, forcing buyers to use that payment method will inevitably limit traction. When buyers can pay the way they choose while sellers can receive funding how they choose, both sides can win.

Geron said finding success in this space is about “connecting the dots” — and not just between the various workflows that a buyer and seller may endure. It’s also about collaborating with technology partners and connecting their solutions within a single ecosystem.

As Geron noted, this strategy isn’t just about delivering a positive user experience for both buyer and seller. “In the end, what you want to ask is, what’s the goal? Experience is not a goal,” he said. “The goal is to enable merchants to scale B2B payments.”

Today, he continued, that’s not possible. There are too many silos that make accepting payments a challenge, so even as businesses can launch digital operations and scale in the form of customer acquisition, having the capacity to support a higher volume of payments isn’t always doable without a solution designed specifically for this environment.

Balance aims to address that pain point, and to help B2B sellers and their eMarketplaces to scale their B2B payments. According to Geron, the opportunity is part of a broader shift in B2B payments as innovators find more traction with their technologies. That has big implications for the broader economy.

“The economy of the world is B2B,” he noted. “If you can optimize the ability for business buyers to find suppliers, and for suppliers to acquire new buyers, in a seamless way, the economy will not look the same … There is a real chance to change how we transact globally.”