The business-to-business (B2B) payment credit landscape has long been stable. Still, traditional lenders have neglected certain segments due to high service costs, risk concerns, and difficulties in addressing the needs of businesses often categorised under retail banking. Small-to-medium enterprises (SMEs), particularly micro and small companies, universally face challenges in accessing credit. B2B Buy Now, Pay Later (BNPL) solutions are gaining traction as potential disruptors – can they reshape how small businesses handle payments and financing?
In essence, B2B BNPL is a hybrid solution that blends traditional credit tools (including purchase-on-account, trade credit, and factoring) and makes them available through various channels, often as an Embedded Finance solution at the point of purchase. While the business-to-consumer (B2C) BNPL market generated considerable hype over the past decade, initial expectations often outpaced its ability to deliver. In particular, increases in funding costs and regulatory scrutiny – both directly and indirectly – facilitated overindebtedness in financially vulnerable consumer segments. The B2C BNPL market subsequently faced rising bad debt rates and higher costs, coinciding with a period when investor support became much more selective.
Following the burst of the B2C BNPL bubble, the B2B opportunity has moved into focus – though as of today, its potential remains largely untapped. With a global B2B payment volume of USD 124 trillion in 2018, nearly three times the size of the B2C market at USD 52 trillion1, the opportunity is significant. However, much of this value is driven by large enterprises that are not the immediate targets of B2B BNPL solutions. On the other hand, small and micro businesses suffer from a USD 2.6 trillion2 global lending gap, underscoring the potential for B2B BNPL to address these unmet needs.
Despite this promising demand, estimated B2B BNPL revenues remain modest, reaching only USD 14 billion according to Allianz Trade’s research3, compared to the USD 300 billion4 generated in the B2C BNPL market. Nevertheless, several players, including Hokodo, Two, Balance, Mondu, and Billie, have emerged to tackle this gap.
While B2C BNPL has proven that flexible credit can disrupt traditional payment and lending methods with a solution suitable for impulse purchases, B2B presents its own set of complexities. Even though B2B solutions can build on similar technologies and business models, the B2B market involves more complex credit assessments, longer payment cycles, and higher collection costs. The upside? Larger transaction sizes, stronger customer loyalty, and lower default risk, as businesses rely more on maintaining solid credit scores.
Currently, over USD 30 trillion in annual global B2B sales5 depend on traditional trade credit, with 50-60% of B2B transactions financed this way. Despite the growing interest in BNPL, a Marqeta survey6 shows that 31% of B2B buyers have never used BNPL for business purchases, and 43% are unaware it is available for B2B transactions. This is partly due to the low share of only 21% of B2B sellers offering BNPL as a payment option7. Despite these barriers, the potential for B2B BNPL remains significant, especially considering that 90% of B2B buyers who make purchases weekly report inefficiencies in their payment processes8. Additional potential arises, as 45% of interviewed B2B buyers indicated that they would spend more if they had greater access to trade credit9. Furthermore, 90% of respondents state that a poor checkout experience negatively impacts their loyalty, suggesting that B2B sellers could benefit from offering more flexible payment and funding solutions10.
The evolution of BNPL since the launch of Klarna’s B2C solutions in 2005 can be illustrated with a curve typical of Gartner’s Hype Cycle11, as shown in Figure 1. From its early days through 2015, the market gained momentum, peaking with inflated expectations in fall 2021, followed by a sharp correction. Since then, the B2C segment has somewhat stabilised. Meanwhile, clear B2B use cases have emerged, particularly for micro and small-to-medium enterprises (MSMEs).
Figure 1: BNPL hype cycle and dependencies between B2C and B2B sector
Source: Arkwright analysis
Macroeconomic factors – especially interest rates and their impact on company valuations, inflation and its influence on purchasing power, and the pandemic’s role in accelerating digital adoption – have significantly shaped the hype cycle. Looking ahead, consolidation, a stronger focus on profitability, and deeper integration with distribution channels are expected to drive further growth in both B2C and B2B markets.
According to Edward Brandler, co-founder of B2B BNPL provider Two, a B2B BNPL opportunity emerged from a previous B2C marketplace built in South America, where approximately 80% of business buyers abandoned their baskets12 due to a lack of trade credit and credit card options.
B2B providers are increasingly focusing on SMEs, whose financing needs often resemble those of consumers but whose ability to access credit and interface successfully with lenders differs significantly from larger companies.
Larger firms benefit from the ability to negotiate payment terms, access pre-arranged credit lines, and utilise centralised procurement, making financing easier compared to SMEs and allowing them to leverage economies of scale. This stands in stark contrast to MSMEs and SMEs, which often have limited financial management capabilities. Banks frequently fail to address the unique needs of smaller businesses, treating them like retail customers.
Overall, most SMEs face several key challenges in financing operations:
Limited financial skills: SMEs often lack the capacity to engage in complex bank negotiations.
Restricted access to financing: more than 50% of global SMEs lack access to credit13.
Worsened liquidity: in 2020, 57% of surveyed SMEs reported collecting payments late14. For example, UK data indicates that SMEs are owed more than USD 300,000 on average, with payment delays ranging from 60 to 120 days15.
Increased cost of capital: high borrowing or fundraising costs add to the financial strain.
These issues severely impact SMEs’ working capital, with delayed payments accounting for over 20% of corporate insolvencies16. SMEs, which represent 90% of businesses globally and provide 50% of jobs, urgently need flexible financial solutions. In response, over 50% of European B2B sellers17 now view offering flexible payment terms as a key growth driver.
B2B BNPL solutions can help alleviate these challenges and address the USD 2.6 trillion global lending gap that disproportionately affects SMEs18. The benefits of B2B BNPL for sellers, marketplaces, and buyers are summarised in Figure 2.
Figure 2: Benefits of B2B BNPL for sellers/marketplaces and buyers
Source: Arkwright research, Allianz Trade19, Hokodo20, Billie21
Like any payment and credit solution, B2B BNPL operates as a two-sided business, with sellers needing to integrate it as a checkout option and buyers needing to opt for it. The latter will likely require investment in communication and education, as the B2B payment space remains slow to change, particularly in smaller companies that lack dedicated procurement and finance decision-making capabilities.
The opportunity is not without potential pitfalls. Among these are:
Attracting low-quality borrowers: stronger firms tend to favour traditional financing, meaning BNPL might attract riskier customers.
Overspending and debt: increased credit use may result in unsustainable debt levels.
Hidden fees and interest: payment delays could lead to higher costs due to fees and rising interest rates.
A broader development of B2B BNPL could help address specific financing pain points faced by MSMEs and SMEs. Figure 3 highlights the opportunities and threats for financing suppliers, as well as for companies that may play a role in facilitating the distribution of such services.
Figure 3: Implications of advancing B2B BNPL for SMEs and their key stakeholders
As with the previous case of B2C BNPL, the growth of B2B BNPL depends not only on the dynamics of supply and demand but also on the emergence of other financial innovations. Independent software vendors (ISVs) could challenge BNPL providers by developing all-in-one solutions that integrate features such as finance, accounting, and procurement tools. Use cases for SME accounting solutions and procurement marketplaces seem promising.
Larger firms with established access to credit lines are unlikely to become large-scale BNPL adopters. However, some larger firms – especially those with a significant SME customer base (e.g., insurance companies and providers of accounting and payroll software) – could play a key role by integrating B2B BNPL into their payment and financing options. Seamless integration and targeted communication will be critical prerequisites for driving adoption.
Finally, B2B BNPL represents a potential arena for strategic partnerships. For instance, Billie’s recent collaborations with BNP Paribas and Stripe serve as an accelerator model for market development. Emerging markets in regions such as South America, Southeast Asia, and Africa, where access to traditional banking remains limited and reliance on alternative financing methods like micro-lending is high, offer an untapped opportunity for further expansion.
1 https://www.statista.com/statistics/1251237/payments-market-size-usa-and-global/
2 https://www.jpmorgan.com/insights/payments/trade-and-working-capital/trends-in-trade-2024
3https://www.allianz-trade.com/en_global/news-insights/business-tips-and-trade-advice/revolutionizing-B2B-payments-key-statistics-and-trends.html#:~:text=%2414%20billion%3A%20The%20global%20B2B,%2C%20marking%20a%20 106%25%20increase
4 https://www.allianz-trade.com/en_global/news-insights/business-tips-and-trade-advice/what-is-b2b-bnpl.html
5 https://www.hokodo.co/buy-now-pay-later-future-b2b-payments-white-paper
6 https://www.marqeta.com/blog/b2b-bnpl-small-business-financing-done-differently
7 https://www.hokodo.co/buy-now-pay-later-future-b2b-payments-white-paper
8 https://www.trevipay.com/wp-content/uploads/2021/05/TreviPay-B2B-Buyers-Report.pdf
9 https://www.trevipay.com/resource-center/blog/uk-b2b-trends-building-loyalty-with-modern-trade-credit/
10 https://www.getbalance.com/guides-and-reports/the-b2b-ecommerce-buyer-report
11 https://www.gartner.com/en/research/methodologies/gartner-hype-cycle
12 https://www.marqeta.com/blog/b2b-bnpl-small-business-financing-done-differently
13 https://www.jpmorgan.com/insights/payments/trade-and-working-capital/trends-in-trade-2024
14 https://www.getbalance.com/post/the-ultimate-list-of-b2b-payment-statistics
15 https://www.timefinance.com/press-releases/late-payment-debt-as-high-as-200000-for-1-in-5-smes/
16 https://www.r3.org.uk/press-policy-and-research/news/more/28961/store/519648/page/1/
17 https://www.worldbank.org/en/topic/smefinance
18 https://www.jpmorgan.com/insights/payments/trade-and-working-capital/trends-in-trade-2024
19 https://www.allianz-trade.com/en_global/news-insights/business-tips-and-trade-advice/what-is-b2b-bnpl.html
20 https://www.hokodo.co/buy-now-pay-later-future-b2b-payments-white-paper
21 https://www.billie.io/en/b2b-checkout-report#download
This editorial piece was originally published in The Paypers` Buy Now, Pay Later Report 2025. The report provides thorough insights into one of the fastest-growing alternative payment methods, BNPL, and discusses the main trends and innovations across key markets worldwide.
Francesco is a Partner at Arkwright Consulting AG, having more than 23 years of corporate and product strategy experience in retail and corporate payments, Open/Embedded Finance, cross-industry platforms, superapps, and ecosystems. Before his consulting career, Francesco was a transaction banker at HSBC. Fellow of the London Institute of Banking and Finance, INSEAD Alumnus, Francesco is a Learning Coach with INSEAD Executive Education for Strategy, Digital Transformation, AI and Innovation programmes.
Malte is an Associate at Arkwright Consulting AG within the Payments and Digital Banking practice.
Arkwright is a high-end payments and digital financial services strategy boutique. Founded in 1987 in the Nordics as a spin-off from a major strategy brand, Arkwright operates globally with offices in Hamburg, Oslo, Stockholm, and London, and an additional operational presence in the Middle East and the US. Arkwright works at the intersection of fact-based analysis and deep industry knowledge, serving selective clients.
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