Moving B2B Payments Online Makes World a Much Smaller Place, Says Mangopay

Anyone who has ever conducted business knows the pains that traditional B2B payment modalities bring.

But there’s a digital renaissance underway, as firms on both sides of the transaction look to modernize their antiquated processes.

“Businesses are becoming much more aware and much more savvy about how to operate digitally,” James Butland, U.K. managing director at Mangopay, tells PYMNTS, explaining that handling B2B payments offline comes with “a lot of admin, a lot of costs and time lost.”

After all, paper-based processes have piled up enough inefficiencies. In today’s operating environment, streamlining workflows and taking the cost out of legacy payment processes is crucial to sustainable growth.

The past few years have witnessed significant disruptions to global trade due to the COVID-19 pandemic and subsequent inflation spikes. Businesses are now more cost-conscious and are actively seeking ways to save expenses. Utilizing B2B marketplaces and exploring multiple platforms allows businesses to shop around and find cost-effective solutions, Butland said.

“Using a B2B marketplace gives you a wider range of goods from different suppliers, rather than using just one or two suppliers, as well as enables you to use different payment methods … and as we speed up the payment of goods, we can also speed up the delivery of goods,” he said.

A growing awareness of the convenience and ease of doing business digitally is accelerating the adoption of B2B marketplaces.

Leaning Into Digital B2B Marketplaces Brings Convenience and Cost Savings

While B2B marketplaces often draw inspiration from consumer-focused online marketplaces, like Amazon, there are inherent complexities to B2B transactions where consumer learnings just don’t translate.

“The difference is obviously speed,” Butland said. “Consumers don’t have any patience … but businesses don’t operate that quickly.”

That’s because, unlike consumer purchases, B2B interactions involve longer delivery timelines and various additional factors such as custom import charges and delivery charges. Trust is crucial in B2B marketplaces, and businesses rely on marketplaces to conduct due diligence on sellers. Transparency, quality assurance, and cost considerations remain important factors for businesses, Butland noted, and constitute areas where marketplaces can differentiate themselves.

“The big commonality between consumer marketplaces and B2B ones is that both consumers and businesses want to see a wide range of goods,” Butland said.

“And in our role as a payments company supporting these marketplaces, it’s how we can ensure the money moves as quickly as possible so that all those other processes can then start as quickly as possible.”

The Role of Payments and Data Flow as B2B Firms Modernize

Data flow and security are critical aspects of B2B marketplaces. Ensuring the legitimacy of buyers and sellers is an ongoing process, and marketplaces play a vital role in establishing trust, Butland said, explaining that payments also play a crucial role in bringing buyers and suppliers closer together, with discounting terms and timeliness of cash flow being important considerations.

“If you pay for your goods, and your goods arrive in a timely manner, that builds trust and that builds a relationship with that marketplace,” he said.

Butland also said that while historically U.S. dollars have dominated international B2B trade, businesses are now exploring alternative currencies and payment providers need to adapt in order to meet new expectations around seamless foreign exchange (FX) and cross-border payment experiences.

“All this [paying in your currency of choice both securely and easily] builds trust with the marketplace,” Butland said.

And the growing movement toward faster payments and interoperability is increasingly expected to revolutionize B2B and cross-border transactions.

“What we do is enable businesses to pay in their local currency so there is no FX charge on top … there’s no surprise, and it takes away the complexity and opaqueness of using U.S. dollars or a third currency for buying and selling overseas,” Butland said.

Faster payment systems have already demonstrated the potential for economic growth and streamlined trade, he said.

“As a buyer, you want to release the funds as late as possible before you receive your goods. And as a seller, you want the funds as soon as possible before you release your goods,” Butland said. “So, there is a timeframe where both the buyer and seller need certainty around the transaction … but if you send those funds via a check or another payment network it could take 4,5,6 business days, even longer, causing delays.”

That’s why, he said, modern B2B payments are a much more efficient way of doing business — they make the world a smaller place.

And as businesses navigate the changing landscape of B2B payments, digital transformation and the rise of marketplaces offer new opportunities for streamlining operations and accelerating growth.