Companies that offer Buy Now, Pay Later (BNPL) services are revolutionizing how
consumers shop for goods. Historically, consumers had access to EMIs and other financing
options like credit cards.
However, BNPL has significantly simplified the procedure for customers. Additionally, BNPL
businesses don’t even charge their clients any interest in using their services.
Can BNPL influence the business-to-business (B2B) sector as it has on the consumer (B2C)
front? Can the same results be achieved on the B2B front as with B2C merchants who have
discovered that incorporating BNPL services into their checkout services has helped boost
conversion rates and raise average order values?
B2B trade finance and BNPL
The B2B market can seem like the logical next step for BNPL suppliers, but certain obstacles
exist.
1- The risk question
Before the widespread implementation of BNPL in B2B payments, one of the key queries was who
would be responsible for collection in the event of client non-payment. Banks take on that risk in
the current conventional strategy utilizing credit cards. Disrupting this established business can
be even more difficult than it first appears because banks operate on a far larger scale than the
largest BNPL service provider.
Since the BNPL providers will be in charge of the customer’s outstanding amount, lenders who
have worked with these providers and will expect a premium if they share the risk. The suppliers and costs will increase as a result, and they will have to give discounts to make up the difference, lowering their margins.
Overall, switching from credit cards to BNPL services may not be worthwhile for providers.
That is due to the possibility that BNPL services will cost more than the minimum fees that
credit cards impose.
To underwrite the risk associated with non-payment, BNPL b2b payments providers would also
need to form agreements with all lenders. It might easily develop into a very sophisticated
procedure with its cost structure.
Using cutting-edge technology to automate the underwriting procedure and apply machine
learning to improve credit decisions is one potential solution for BNPL services. That may result
in a more simplified approach to serving customers and foster greater brand loyalty.
2- The difficulty of integrating BNPL’s streamlined procedure with the B2B vendor’s
checkout process
Lower conversion rates and a smaller average order quantity could result if the procedure is
made even marginally more difficult. The current checkout process is dominated by debit and
credit cards, and you even have the option of storing your cards for further purchases.
The majority of BNPL service providers presently rely on external credit programmes. They
should combine their services to provide a streamlined service to suppliers and customers with
conventional supply-side credit cards.
If executed properly, that might result in more affordable financing for merchants than credit
cards. However, there are difficulties in putting such integration into practice.
The purchaser must sign up for the programme during checkout. They might decide against
making the transaction altogether if they are rejected. BNPL providers are asking vendors to take
this kind of risk. In this case, the vendor will want more control over the credit programme to
ensure it meets their needs.
3- Prospects of b2b BNPL payments
There has been much discussion regarding BNPL’s potential in the B2B market. Such
multinational corporations as Apruve and Slope are investigating this market.
To modify the way financing is done in the market, a B2B vendor will need to consider several
things and address them one at a time. Their business might change, which would be a strong
motivation.
If implemented correctly, it might even compel credit card issuers to lower their rates, which
would have a ripple effect on the payments industry.
It is amazing to think about where the BNPL space is going. Vendors and service providers are
already benefiting from the widespread usage of BNPL in the global B2C market. If they want to
genuinely disrupt the payments industry and bring about a constructive change from the status
quo, they still have a long way to go.
What are the BNPL solution types?
For e-stores and point-of-sale (POS) systems, there are BNPL systems. Additionally, the BNPL
provider may offer a specific application that allows users to register for an account and track
Repayments.
Additionally, these service providers enable upfront payment to businesses. Let’s go over the
different buy now, pay later configurations:
1-Online
You can incorporate online BNPL alternatives into your online store’s b2b payments options.
Customers who shop online can select this payment option, pick a repayment schedule, and
finish the transaction.
2-In-store
Physical stores can incorporate a POS system with the purchase now pay later option added to
their payment methods. The retailer can then provide it at checkout, typically through a QR code
or a payment link. This option is also known as point-of-sale credit.
Wrapping up
BNPL has only recently begun to catch on in India and is already widely known among
consumers there. The notion itself is not new, but the added convenience is.
It would be best to have a cloud-based lending solution with streamlined functionalities for a
hassle-free loan lifetime. To learn more about b2b payments, contact organizations that offer
invoice discounting.