As B2B commerce undergoes a seismic shift towards digitisation, driven by the growth of B2B e-commerce and evolving customer expectations, one crucial aspect of business operations is experiencing a parallel evolution: B2B payments. This article presents a few predictions for the B2B payments landscape in 2024 and beyond.
The digitisation of offline B2B payment methods
Online checkouts will see an influx of payment methods previously confined to the offline world.
The B2B sales landscape is undergoing a profound digital shift fueled by technological advances and the evolving needs of businesses. Central to this shift is the ascendancy of B2B marketplaces, seamlessly weaving themselves into the fabric of mainstream business-to-business commerce. These marketplaces are emerging as powerful facilitators of B2B trade, offering a centralised platform where business buyers can effortlessly connect with suppliers, explore new products, and streamline their procurement processes.
As the relentless wave of digitalization continues to reshape B2B commerce, payment methods are compelled to evolve in tandem. Business customers navigating digital marketplaces seek familiar and convenient payment options. Consequently, in 2024, we expect to see a notable integration of traditional payment solutions – commonly associated with brick-and-mortar establishments and previously confined to offline transactions – into online checkouts.
One example of this is the trade account. In traditional retail, especially in countries like the UK, such accounts are often offered in physical shops through a heavily manual and paper-based process. However, these processes can be digitised and made available in real-time for online purchases with solutions like Mondu’s Digital Trade Account.
Enabling cross-border B2B payment solutions
More payment providers to offer innovative solutions for cross-border B2B payments.
The rise of e-commerce platforms and online marketplaces has made it easier for businesses to sell their products and services to customers worldwide, removing geographical limitations and opening up new opportunities for cross-border trade. This has increased the importance of cross-border payment solutions.
Handling cross-border payments is a complex process. An effective cross-border payment solution must account for the specific requirements of different countries, including local forms, risk assessments, and diverse invoicing requirements. Until recently, these complex requirements meant that only a few payment providers could offer appropriate solutions to B2B merchants.
However, more payment service providers have stepped up their efforts to simplify cross-border payments. Mondu, for example, allows B2B merchants to offer BNPL (Buy Now, Pay Later) payment solutions to shoppers in different countries. As the popularity of B2B e-commerce continues to skyrocket and the need for merchants to sell into foreign markets grows, we can expect cross-border payment solutions to increase further.
Using AI to support real-time B2B payments
More B2B merchants will leverage AI to support real-time payments and enhance fraud protection.
The rise of online B2B transactions has brought a surge in both fraud attempts and customer expectations for seamless B2C-like payment experiences. This has created a pressing need for B2B merchants to adopt AI-driven payment solutions.
Traditional fraud detection methods often struggle with the complexities of B2B transactions involving more significant amounts and longer payment cycles. AI-powered solutions can analyse vast amounts of data and identify anomalies in real-time, significantly improving fraud detection and prevention and providing greater protection for merchants and their customers. Machine learning models continuously learn and adapt to new fraud patterns, ensuring ongoing protection against evolving threats. AI can also analyse customer data and transaction history to assess creditworthiness and grant instant approvals for eligible transactions. This eliminates the need for manual reviews and delays, significantly speeding up the payment process.
On the customer experience front, today’s business customers increasingly expect B2C-like payment experiences, including faster transactions, convenient payment methods, and flexible payment options. AI-driven solutions can automate manual processes, offer self-service options, and enable real-time payments, creating a smoother and more convenient experience for B2B customers. It can also help optimise payment routing and reduce fees associated with traditional payment networks for customers.
Given the dual challenges of rising fraud and growing customer expectations, we can expect B2B merchants to increasingly adopt AI-driven payment solutions in 2024 and beyond.
Enhancing B2B workflows with embedded finance
B2B merchants will embrace embedded finance to enhance the customer experience and increase efficiency.
While embedded finance has already solidified its presence in B2C transactions, exemplified by ride-share apps incorporating in-app payment options and e-commerce platforms integrating digital wallets and financing choices into the checkout process, the evolution of this concept is still underway in the realm of business-to-business (B2B) trade. In 2024, several compelling factors will drive a significant surge in the adoption of embedded finance solutions, with numerous factors driving this trend.
One primary motivator for merchants is the increasing need to provide a superior customer experience amid rising competition. Embedded finance tools enable merchants to get real-time access to customer financial data, empowering them to offer additional value-added customised financial services within existing workflows, eliminating friction and enriching the customer experience.
Another motivator is the need for increased efficiency and automation in the face of rising operating costs. B2B merchants can automate manual payments, approvals, and reconciliation tasks by integrating financial services directly into their business processes. This reduces administrative overhead, frees up resources, and allows businesses to focus on more strategic initiatives.
In 2024, we’ll see more B2B merchants embedding financial services such as Buy Now, Pay Later into their checkouts, giving customers direct access to financing and payments without leaving the platform or application. AI-powered accounting automation platforms that help merchants manage their accounts receivable (AR) and accounts payable (AP) will also see an uptick in adoption.
Navigating the B2B payments landscape of tomorrow
As we stand at the crossroads of technological innovation and evolving market dynamics, the B2B payments landscape is transforming into the digital age. The predictions outlined in this post are just a taste of what likely lies ahead for B2B transactions in 2024 and beyond. Ultimately, B2B merchants that adapt and embrace these shifts will thrive in the ever-changing digital landscape and position themselves as leaders, pioneering new standards of efficiency, security, and customer satisfaction.