The last decade has witnessed the transition of the B2B market towards digital payments. More than ever before, consumers are using contactless and cashless payment methods. In 2022, there were almost $8 trillion in digital transactions. COVID-19 accelerated the adoption of digital payment alternatives by altering how businesses handle and pay invoices. According to research, the global B2B payments industry is burgeoning rapidly and is forecasted to increase to a whopping $2146.70 billion in 2030, registering a CAGR of 10.10%. Today, 74% of B2B buyers conduct at least half of their online research for work-related purchases, and 30% complete at least half of their online work-related transactions.
What are B2B Payments?
Any monetary transaction of goods or services between two businesses is a B2B payment. A business client, such as a retailer or wholesaler, makes a B2B payment in exchange for the inventory when B2B brands offer products online.
What Sets B2B Payments Apart?
The need for internal processing is one of the main differences that set apart B2B payments from B2C. In contrast, B2C payments involve upfront and immediate authorization. Additionally, buying and selling between businesses involves a complex process where higher sums bog down the transactional process.
Listed below are a few factors affecting B2B transactions:
- Quantity – money exchanged between businesses is higher than between them and customers.
- Frequency – contracts may force buyers into more frequent exchanges.
- Industry – depending on the product and volume, every industry has unique payment needs.
- Parties engaged – in B2B transactions, the entire teams handle the billing process.
- Payment delay – revenue lags due to longer B2B payment cycles, typically between 30 and 90 days.
Several issues are slowly taken care of with digital payment choices, although it might be challenging to innovate in the B2B payment market due to various safety concerns and restrictions.
What is the Process of Electronic B2B Payments?
With its simple-to-implement and-use electronic B2B payments, payment processing companies imitate a conventional B2C transaction. The initial step in any transaction is to record the transaction request. The payment data undergoes encryption before sending the request to an acquiring bank. The acquiring bank connected to the buyer’s account must approve the transaction. An issuing bank receives the request and must determine whether the buyer has sufficient funds before acting. The acquiring bank receives a prompt reply.
The next thing they do is send the payment gateway the requested data. The payment gateway completes the request and notifies the buyer and seller about the transaction acceptance (or denial). Any payment platform, including eCommerce or SaaS systems, can easily incorporate payment processors.
This is an essential factor when looking for B2B payment software. Overall, the proper software should be able to track and accept all forms of payment, including wire transfers, ACH, eChecks, and credit cards. For the convenience of the clients, it should also support numerous currencies. Customer options for their financial transactions are expanding thanks to electronic B2B payment systems.
