B2B’s digital makeover will take a cue from B2C, from the Amazons of the world, as paper checks give way to payments authorized with the click of a mouse. Buyers, increasingly, will find sellers not through paper catalogs but online platforms. Tech-savvy millennials will lead the way as B2B interactions modernize.
Lu (Fausha) Chen, senior strategy manager at Worldpay (now part of FIS), said that several trends are underway that will make B2B payments seems a lot more B2C in nature — marked by ease of use and transparency.
The influence of B2C commerce has been far-reaching, she noted — and has been having ripple effects in buyer/supplier relationships.
None of this is to say that there will be a complete shift to digital payments in one fell swoop. B2B transactions are typically more complex than those made directly by consumers in a retail setting — and usually involve large sums that cross borders, time zones and currencies.
There is still a long way to go for these B2C eCommerce influences to become the mainstream in B2B payments. Several years from now, we’re likely to be still talking about friction in cross-border payments. Companies are still at different stages of technology adoption; larger players are still grappling with the challenges of maintaining and upgrading legacy systems.
In the industry, Chen told PYMNTS, “we do see an improvement of cross-border payments — making them easier, cheaper and faster, even real-time.”
She pointed to a number of approaches to making B2B payments faster and more efficient. Incumbent players like SWIFT have introduced Swift gpi, and the payment schemes have been rolling out solutions like Visa Connect and Mastercard Track, trying to facilitate B2B payments by connecting the buyers and suppliers across single platforms.
The Way It’s Been Done
Within the B2B sphere, which has traditionally been dominated by offline channels of contact and communication between buyers and sellers, by paper invoices and checks, expectations have been shifting. The trends toward digitization were there before COVID-19, she said, but have been accelerated amid the pandemic.
“Manufacturers were already exploring D2C business alongside their traditional wholesale distributions,” Chen said. As part of those explorations, and in a bid to capture additional revenue streams, those manufacturers have been using platforms available from third parties or have built their own platforms to more directly connect with their end users.
The urgency is there to shift operations online, said Chen. A majority of B2B buyers have stated that online channels are their most important conduits to placing orders.
The digitization of commerce has also introduced a broad range of payments (including alternative payments into the mix), Chen noted. B2B payments are rapidly moving away from the check, as getting paid faster, instantly, is becoming vital to maintaining healthy cash flow and cash flow visibility. Add the fact that 75% of the workforce will be millennials by 2025, she said, and the stage is set for further adoption of virtual cards, mobile wallets and even buy now, pay later (BNPL) in B2B activity.
The room’s there, too, for traditional eCommerce firms to facilitate B2B relationships. As Chen told PYMNTS, of one Worldpay/FIS partner who provided eCommerce platforms to B2C customers, 25% of that firm’s customers are now B2B firms. Against that backdrop, B2C platform juggernauts such as Amazon and Alibaba might attract more B2B firms to list with them. Those platforms include financing options and already have scale, which will likely prove attractive to smaller companies that want to sell more goods and services to their own enterprise clientele online.
Chen believes the positive effects of digitization are significant, as buyers can place orders on websites where a continuum of services are available, including intelligent pricing, logistics options and a broad range of payments options. Upgrading enterprise resource planning (ERP) systems via cloud solutions gives firms real-time views of payments reconciliation and better insight into how their supply chains are faring, she noted.
As B2B practices and payments shift inexorably away from decades-old traditions toward B2C-like speed and convenience, successful pivots will require a mindset shift among enterprises’ senior leadership. “The most difficult part of any kind of technology adoption is how you convince the C-suite,” she told PYMNTS.