Voice of the Industry

Top 3 predictions in payments for B2B ecommerce in 2021

Thursday 10 December 2020 09:29 CET | Editor: Vlad Macovei | Voice of the industry

Stefan Backlund, CMO at Payer, shares his thoughts on what should the payments industry expect from 2021, making predictions on B2B payments development, automation, and BNPL in B2B

We have just three weeks to conclude 2020 and the world will probably never look quite the same again after this year. It's been a year of unspeakable losses for many families all over the world. Most of us have concerns over the future unknown. 

Social distancing is so far from the core of humanity. But distancing in business, at large meaning digital businesses, have been thriving in 2020. We have reached a tipping point where digitisation just keeps on spinning faster.

The consumer space of ecommerce was well prepared to handle the shift from traditional retail when the pandemic hit. The B2B sector wasn’t prepared as much. However, as the B2B companies are waking up to a new reality it’s also time to wake up an old English proverb to life: ‘Necessity is the mother of invention’.

These are three predictions for the B2B payments space for 2021 and beyond:

1. Payments will stop being a commodity

Payments not being a commodity anymore is a prediction which actually goes against research made on the subject, for example pointed out in this insightful blog post by Accenture. But as the article also explains: 'For ecommerce PSPs, value-added services beyond core processing and collecting now account for 39% of revenue and these services are growing at 20% per annum'.

Imagine that your customer is having a nice dinner at a restaurant and that the only interaction with you is where the waiter presents the bill and asks for payment. As a PSP, you are merely there as a painful representation that a nice evening is now coming to an end and the customer will have an equally painful realisation when she looks at the account balance later.

What B2B payments companies are doing today is not even remotely close to what they must become in 2021 and beyond to survive and thrive because the customer experience doesn’t start and end with just the payment. 

So, what if we rewind the tape and look at your customer at the restaurant? What if you could help your customer find the restaurant, greet her by the door, present the menu and tonight’s specials? She would remember how fast the service was and how much she enjoyed the ambience and the quality of the food. Then the value is not only represented in the goods she paid for but for the entire experience. The merchant will be happy to pay for the value-add as you have contributed strongly to getting a returning customer.

In 2021 PSPs need to create that value for both the customer and merchant to build business stickiness. Consumer payment companies are very good at creating this magic UX. But as B2C and B2B customer experience are converging we are taking big leaps to get to that point faster next year in B2B.

I’ve written about the importance of UX in B2B in a past The Paypers thought leadership piece, UX in B2B payments and the pursuit of happiness, if you want to read more.

2. Automation

The pandemic is accelerating the necessity to shift parts of sales to digital channels. It really comes down to the matter of ensuring up-time and business resilience. Automating digital sales does not only ensure that merchants are available 24/7 but it also means that they can introduce systems that effectively remove any chance of human error in the order-to-cash cycle (O2C).

What we do at Payer is to harmonise payment information in central data warehouses and automatically distribute this data to all business supporting systems independently on type of ERP systems, BI tool, or accounting software.

3. Buy Now Pay Later in B2B 

My third bet is that 2021 is the year BNPL solutions will begin to pop-up on the B2B ecommerce map. In the consumer space, it has been spearheaded the last 15 years by companies such as Sweden-based Klarna, Australia-based Afterpay, and US-based Affirm. BNPL was originally developed by a single and fundamental notion that solving liquidity for both the consumer and the merchant can’t be anything else than good for business. 

The potential gain of a BNPL solution is perhaps even stronger in the B2B, especially where SMEs are on either side of the checkout. The core problem that BNPL is solving is exactly the same as in B2C: lack of liquidity on both the buyer’s end and the seller’s end. The main difference between the B2C value-add and the B2B value-add is that when companies are buying, they do that out of pure necessity. Any goods purchased are intended to have positive effect in any end of a business spectrum. A B2B BNPL scheme will reduce the risk for the merchant as it getting paid immediately and is at the same time giving the buying company leeway with the possibility to down pay an invoice over a period of time.

Since a BNPL solution by nature is fully automated it also has the potential to solve most of the steps in the order-to-cash (O2C) cycle. If we look back at the pandemic year of 2020 it should have been a well needed payment option to offer for many online businesses. 

However, a development of such a product doesn’t come without challenges. The complexity lies in the amount of data you would need to process to algorithmically (and automatically) make credit risk assessment in real-time.

Access to financial company data, 2FA, Open Banking, and a harmonised regulatory landscape is in combination a key to solve the BNPL roadmap. That’s why I believe Europe especially is poised to lead the development of BNPL solutions for B2B.

About Stefan Backlund

Stefan is a marketeer, venture partner, and investor. He recently held the position of Vice President of Marketing & Communications at Trustly, the Pan-European payments company. Stefan started his career in the fintech industry at Swedish payment unicorn Klarna, where he was heading up B2C marketing, also on a European level. At Payer, Stefan is CMO which means that he is an asset for partner companies to discuss marketing, communication, PR, and commercial related topics with.

About Payer

Payer is a digital B2B payments company that serves local and global ecommerce companies to get paid from their customers. Payer facilitates card, B2B invoice, and bank payments in the EU, US, and beyond. Payer's mission is to create magical and safe payment experiences for B2B ecommerce through a robust API based payment platform. Our most successful merchants combine conversion, payment, and administration modules to create an end-to-end buying experience. 

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Keywords: payer, B2B, payments , ecommerce, digital payments, automation, BNPL, B2C, O2C, buy now pay later, order to cash, PSP, UX
Categories: Payments & Commerce
Countries: Europe
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