The outbreak of the Covid-19 pandemic changed the conventional landscape of the E-Commerce industry. The social distancing and lockdown norms that came with the pandemic forced buyers and sellers to move away from traditional in-person shopping to more modern and digital platforms. This trend was common among both B2C and B2B markets alike. The shift towards digital platforms also had an impact on the B2B payments segment, wherein traditional methods such as cash and checks were seen to decline, giving way to new forms of B2B payments such as credit/debit cards, virtual cards, cryptocurrency, instant payments, and others.
Amidst the shift towards more digitalized payment methods, Fintechs are entering the B2B scenario by offering innovative value-added solutions. Although several B2B sellers are willing to eliminate check payments, banks have lacked the ability to offer a combination of technology and financial service that companies would need to become digital. For instance, banks now are in a position to offer only a variety of cards and Automated Clearing House (ACH) payments. Fintechs on the other hand can offer both technology and financial service, thereby offering a complete solution. For instance, Fintechs such as N26, LiLi, Qonto, and TripActions have added to their portfolio of services other add-on services such as expense management, accounting software, lending and travel management services as well as working capital optimization.
Likewise, in the area of cross-border B2B payments too, Fintechs such as Wise, Rapyd, TransferGo, and WorldRemit have identified the pain points of B2B buyers and sellers and are offering them transparency in terms of transaction costs and simplicity in the payment process. Bill Hop, Boost B2B, and CSI/Edenred work with B2B buyers and sellers using commercial cards to create awareness among them regarding the benefits of commercial cards, thereby convincing suppliers to accept this innovation, expanding the acceptance network of commercial cards.
The payment industry faces the threat of fraud on a large scale, and the B2B payment segment is no exception to this. According to data cited in our latest publication, “Global B2B Payment Trends 2022”, in 2021, nearly half of B2B companies reported experiencing significant payment fraud. With the rise of Fintech players, criminal activities within the B2B payments segment can be minimized. Fintechs use automated fraud detection tools to detect potential threats thereby warning the account owner. One important segment of fraud detection is anti-money laundering protection, which enables the identification of suspicious transfers of funds.
To sum up, Fintechs have clearly understood the challenges that B2B buyers and sellers face and have reacted to provide them with customized solutions to suit their needs. Fintechs have contributed to not only the growth of B2B payments but have also made them easier, more transparent, safer, and more cost-efficient. Thus, it is expected that Fintechs will continue contributing to streamline the B2B payments.