Voice of the Industry

Buy Now, Pay Later: the real value is in B2B Payments

Thursday 2 November 2023 08:00 CET | Editor: Raluca Ochiana | Voice of the industry

Louis Carbonnier, Co-founder and Co-CEO at Hokodo, shares light on one of the biggest trends in the payments industry in 2023 – B2B BNPL. He discusses how this new type of lending will impact merchants and help them stay on top in a highly competitive business environment.  


With a global total payment volume (TPV) of USD 309.2 billion, Buy Now, Pay Later (BNPL) is going through something of a golden age. The number of BNPL users worldwide is estimated to double to a total of 900 million by 2027, while the size of the global industry is predicted to reach USD 3.7 trillion in 2030.

However, recent stock market declines and difficulty for BNPL firms to become profitable are generating questions over the viability of this business model. With the addition of heightened regulatory oversight, you have all the ingredients for a reshuffling in the world of BNPL.

The future of BNPL lies in the B2B trade. B2B and B2C are distinct sectors with very different purchasing behaviours and market dynamics. As an opportunity, deferred online payments for businesses are virtually untapped, but consumer BNPL has become a highly saturated market, with end buyers bombarded by offerings from a mass of homogeneous providers.

Let’s not also forget that the B2B market is more than three times the size of the B2C sector – and growing twice as fast. All things considered, the B2B sector is ripe for payment innovation.

The impact of COVID-19 on B2B BNPL

Causing supply chain disruption, delayed payments, and financial strain on countless businesses, the pandemic highlighted just how important flexible payment options were for B2B. When available, the choice to defer or split a payment provided business buyers with much-needed financial flexibility and helped them navigate the unprecedented impact of the COVID-19 pandemic.

Facing economic uncertainty and severe cashflow challenges, businesses sought flexible payment options to help keep their heads above water. B2B BNPL solutions empowered them to buy the stock or materials they needed – and pay for them once they had started to make profits. This was particularly beneficial for businesses that experienced revenue fluctuations, enabling them to manage expenses while maintaining financial stability.

‘What about the sellers?!’ you may say. Don’t worry, B2B BNPL also helps the sellers. While buyers are permitted longer, more flexible credit terms, merchants offering ‘Pay Later’ products benefit from full, upfront payment. Unsurprisingly, accelerated adoption of B2B BNPL during the pandemic has led to increased competition in the market. Traditional financial institutions and specialist fintech companies alike have recognised the potential of B2B BNPL and entered the space, offering a variety of solutions to businesses. The result? Innovation, improved offerings, and increased options for buyers and sellers.

Spurred by the pandemic, B2B trade is moving online. However, a 2020 survey by McKinsey revealed that 96% of European B2B buyers would make a purchase in an end-to-end, digital self-serve model. The report also found that 73% of B2B buyers are millennials who prefer buying online. The fact is that B2B buyers and sellers have had a taste of how safe, simple, and supported their transactions can be, so why would they give that up?

The key growth drivers for BNPL in B2B 

Let’s explore a few of the drivers that are helping providers like Hokodo create value for B2B businesses and fuel the growing adoption of BNPL services. 

Competitive advantage and differentiation 

With more trade taking place on digital platforms, sellers are looking for ways to beat the competition. By providing payment options that their competitors lack, they can attract customers, win new business, and secure long-term partnerships. Offering the desired combination of payment terms and settlement methods is proven to improve conversions and retention in B2B. Internal research from Hokodo shows a 40% increase in conversions and 24% uplift in purchase frequency among merchants that have implemented our solutions. 

Technological advancement and ecommerce adoption 

As buyers and sellers embrace digital platforms and online purchasing, they are looking for payment options that align with their digital strategies. Buyers want fast approval for credit without filling in forms, while sellers want to minimise the time spent on credit checks while staying protected from risk. B2B BNPL enables businesses to transition smoothly into the digital landscape and capitalise on the opportunities of ecommerce. 

Renewed focus on customer-centricity 

Gone are the days when business buyers would accept a subpar experience on a sketchy ordering site. Business buyers are consumers too, and they expect an experience that reflects what they are used to in their personal lives. They will not stand for poor UX and clunky payments. To cater to these demands, sellers are placing greater emphasis on personalisation, convenience, and responsiveness. With buyer needs at the forefront, B2B sellers are creating digital platforms that inspire trust and make procurement as seamless as possible. 

Buy Now, Pay Later: the future of B2B payments 

More than half of B2B transactions traditionally take place on payment terms. However, traditional methods of offering credit don’t translate well to an online setting. Globally, over USD 30 trillion of B2B sales rely on trade credit, but the tools to facilitate this have scarcely changed in two centuries. 

Credit terms are not an optional service in B2B – they are a necessity, and particularly so during periods of economic downturn. But there are still very few reliable solutions available for online B2B sales. It is reported that 75% of B2B marketplaces offer payment through their platforms and, of those that do, only one in five offer a BNPL option. 

As we step into a new age for B2B, a fundamental shift is required in how transactions are settled. With one foot in the future and one in the past, merchants have sophisticated digital platforms but struggle with complex, offline payment solutions like letters of credit or factoring and credit insurance. This makes managing trade credit accounts extraordinarily painful and sometimes impossible. 

Bringing the end-to-end trade credit management process into one solution, B2B BNPL solves this issue. Sellers can forget the operational burden of offering credit and focus on their growth goals, while buyers get the payment terms they need to grow and thrive.

This editorial piece was first published in the Payment Methods Report 2023, which provides an in-depth overview of the latest worldwide developments in how people pay, the payment methods space, the innovative technologies that these methods work upon, and the best strategies on how to win at conversion and retention.

About Louis Carbonnier

Louis is the co-founder and co-CEO of B2B Buy Now, Pay Later provider of Hokodo, where he leads the commercial and product functions. Previously, Louis was the head and founder of the Digital Agency at Euler Hermes, and he started his career at Oliver Wyman.

About Hokodo

Hokodo provides B2B Buy Now, Pay Later solutions that enable merchants and marketplaces to offer payment terms to customers.

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Keywords: payment methods, ecommerce, payments , B2B payments, BNPL
Categories: Payments & Commerce
Companies: Hokodo
Countries: World
This article is part of category

Payments & Commerce


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