Business payments, increasingly, are being transformed by a number of innovations that take their cue from the consumer realm.
B2B transactions, of course, are complex and certainly considerable in size and scope — running into the thousands of dollars (or more), as buyers interact with suppliers.
Recent weeks and months have seen a (continuing) parade of buy now, pay later (BNPL) offerings geared towards making purchases more affordable by spreading them out over time.
Amazon’s the latest example, where this past week, Amazon Business said it would begin offering BNPL services in collaboration with Affirm. Amazon Business started rolling out Affirm earlier this month to eligible sole proprietor businesses. It will be available at checkout to all eligible Amazon Business sole proprietor customers by Black Friday. Upon choosing Affirm at checkout on Amazon Business, as reported, small business owners will receive an instant credit decision and can choose from pay-over-time installments of three to 48 months. Affirm first launched on Amazon’s website for consumers in 2021 and became a payment option on Amazon Pay earlier this year.
Elsewhere, Balance, based in the U.S. and Hokodo, headquartered in Europe, have partnered to help global B2B players offer flexible payments terms.
And in September, Episode Six debuted Business Now, Pay Later, which in turn lets commercial banks offer small and medium-sized businesses (SMBs) “tailored installment offerings” within their business banking channel.
Earlier this year, we noted that government data showed banks’ approval rate for business loans dipping to the mid-teens percentage level. Alternative lending saw the biggest increase at nearly 2%.
And in joint research between PYMNTS Intelligence and Splitit, we found that BNPL for B2B payments offers many of the same benefits for business owners as has been seen for individual consumers. Chief among those benefits is the absence of interest payments, a feature that is tied to timely transactions. Traditional credit products can charge businesses up to a 60% annual percentage rate (APR). Roughly two-thirds of business owners have covered business expenses with personal funds, which indicates that the market is there to tap other ways of paying for supplies, inventory, and keeping unplanned expenses affordable.
In an interview, David Feuer, chief product officer of Galileo Financial Technologies, told PYMNTS that the wider industry pressures confronting smaller firms pave the way for BNPL to be considered and used more widely. Galileo (owned and operated independently by SoFi) said it has partnered with Mastercard to enable banks and FinTechs to extend Galileo’s buy now, pay later (BNPL) offering via Mastercard Installments to small businesses.
The Galileo loan management platform enables lending clients to oversee the repayment schedule and disbursement of the loans to the virtual cards running on the Mastercard Installments program.
The partnership, Feuer said, lets banks “offer these loans to SMBS before the SMBS even come to the bank and say they need the loan.”
“If we think about BNPL, it’s more of an impulse buy,” he said of consumer-facing BNPL offerings, while in the business arena, “this, instead, is more of a responsible relationship that gives someone access to liquidity when they need it.”
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