The Next Trillion Dollar BNPL Play Will Come From Untapped B2B Segment

As the huge consumer buy now, pay later (BNPL) market sorts itself out, many believe the larger opportunity lies in B2B sales, and 2022 is seeing more deals of this kind as a tight credit market makes existing trade-finance solutions a lot less attractive.

Fans of B2B BNPL note that the profit opportunity is larger in business lending where transaction amounts far outweigh those of any consumer option financing consumer goods.

The latest up is Hokodo, which announced $40 million in series B funding on June 23, just weeks after closing its $12.5 million Series A round. Launched in 2019, the London-based startup pegs the Western Europe B2B BNPL market at $12 trillion, “with $680 [billion] of these sales already taking place online, forming Hokodo’s primary market. This creates a $15 [billion] revenue opportunity for Hokodo, which is set to double every 5 years,” the company said.

In announcing its series B, the company said, “more than 30,000 businesses have chosen to pay later while shopping with the 30+ merchants and marketplaces that currently have our BNPL solution integrated into their online checkout. This new funding will help us to complete our mission of enabling 1 million businesses to access better payment terms by 2025.”

On May 30, Berlin-based Mondu scooped up $43 million in its Series A funding round, with Co-Founder and Co-CEO Philipp Povel saying that “While B2B BNPL is behind the consumer BNPL market, we believe there is a $200 [billion] opportunity just in Europe and the U.S., which is bigger than the global consumer BNPL market.”

B2B BNPL FinTech Billie has been on a roll, as well. Earlier this year, Billie Co-founder and Co-CEO Matthias Knecht told PYMNTS, “The consumer world has been completely transformed over the last 15 years. However, if you turn to the business sector, B2B payments are still stuck somewhere in the 90s.”

Having partnered with Klarna in a two-sided play, Knecht said, “It’s a very complementary product offering; Klarna will cover the B2C side and Billie will go through the current infrastructure and offer the B2B payment method that Klarna customers can use.”

There’s even a waitlist for businesses that want the Billie-Klarna integration.

See also: To Avoid Failure, BNPL for Business Must Be Customized, Not Cloned

Installments and More for B2B Needs

Venture capital that’s dried up for others is flowing into the notion that businesses make more reliable, profitable BNPL users than shoppers, with BNPL debt and overuse making headlines this year while the pandemic-powered BNPL sector seems headed for a correction.

London-based Playter snapped up $55 million in its latest funding round.

In May, CEO Jamie Beaumont told PYMNTS, “It’s a very different approach [from traditional BNPL for business]. It’s almost like post-purchase, where we give all the control and optionality of how people pay and how long the terms are to the businesses paying. That obviously is a huge benefit to the supplier who’s looking to get paid within a 24-hour period as well.”

See also: London-Based B2B BNPL Platform Playter Nets $55M in Funding

BNPL firms aren’t the only ones doing the math on tight business credit and finding new and potentially more steadfast customers in business users of installment credit.

On Tuesday (June 28), PayPal announced its PayPal Business Cashback Mastercard® credit card, with which “Approved businesses are provided immediate access to their assigned credit limit through a virtual card that is automatically integrated into the business’s PayPal account and is immediately available as a payment method when merchants check out with PayPal.”

Speaking with PYMNTS’ Karen Webster, Bernardo Martinez, vice president of global merchant lending at PayPal, said that with the virtual version of the product, businesses “don’t have to wait five days [upon being issued a plastic card] to get going and get spending. They can go ahead and spend wherever PayPal is accepted in the online space.”

See also: PayPal’s First Business Credit Card Helps SMBs Earn Cash on B2B Spend