Just a few years ago, making a business transaction meant having to settle the payment with cash.
Today, you can swiftly pay for goods and services with Venmo, Zelle, Square Cash, and other payment apps.
In 2022, consumer to business (C2B) payments are becoming ever more popular. However, business to business (B2B) transactions have had a much slower online migration.
In 2021, the value of B2B e-Commerce in the US was $6.7 trillion. While this number is impressive, it’s only 13% of the total B2B sales in the country.
In the same year, the global value of B2B sales across payment methods reached $49 trillion. On the other hand, global eCommerce was valued at $7.35 trillion in 2020, and is predicted to create revenue of roughly 18.57 Trillion USD by the end of 2026.
These statistics show that most business transactions are still taking place offline. The question is, why?
Let’s discuss the state of B2B eCommerce payments, the top pain points for B2B buyers, different eCommerce payment methods, and how you can create an effective online payment strategy for your B2B customers.
What are B2B eCommerce Payments?
Alt-text: eCommerce payments
B2B payments are transactions made between two companies. These payments differ from other types of transactions including consumer to business (C2B), person to person (P2P), and business to customer (B2C).
B2B payments are usually more complex, involving more steps.
Innovation for B2B payments lags behind consumer-centered payments. This can be explained by different factors including:
- Volume—B2B payments are usually higher than those involving consumers. The global eCommerce industry is valued at $7.35 trillion, which dwarfs the $4.2 trillion of retail eCommerce.
- Frequency—Businesses often have regular, recurring transactions. For instance, a business may have a monthly recurring shipment from a supplier.
- Industry—Some industries have specific payment requirements. For instance, healthcare providers often use custom B2B payment products due to HIPAA and privacy regulations.
- Payment delay—C2B payments are often done on-site. In contrast, B2B payments usually have cycles that may be as long as 30 to 90 days.
Due to these factors, paper checks are still the most prevalent method of payment between businesses.
Many of today's B2B payment systems were designed for consumers, with only a few tailored to the specific demands of corporate purchasers.
As such, there’s a lot of work to be done in digitizing B2B payments. As businesses continue to migrate online, more and more companies are expected to implement digital B2B payment solutions.
Digital B2B payment solutions make it easier and faster to issue, receive, and process payments—which cut down expenses and improve a business’s cash flow.
What are the Top Pain Points for B2B Buyers?
According to a Deloitte report, the following are the main pain points for B2B buyers:
- Payment delays: 35% of merchants said payment processing delays are a major issue. Around 47% of suppliers are paid late for their services.
- The risk of fraud: 22% of B2B merchants reported facing payment fraud. Limited authorization controls for each transaction and a lack of adequate security for some existing payment methods lead to a high risk of fraud.
- High processing costs: 35% of merchants reported high processing costs being a major challenge with traditional payment methods.
- Limited transaction visibility: Most payment methods have a limited end-to-end view of the transaction which results in extra costs, delays, chargebacks, and disruptions.
- Payment options for suppliers: Often, there’s a mismatch in the payment methods chosen by buyers and suppliers. Buyer payment decisions are highly dependent on payment options used by suppliers.
- Manual processing: Many B2B buyers don’t have the automation capabilities and resources to integrate electronic payments.
- Remittance data processing: Reconciling multiple invoices and processing remittance data can be time-consuming.
These pain points make many B2B players reluctant to adopt eCommerce payments—which leads to potential revenue loss.
According to a report by MSTS, 48% of B2B buyers didn’t complete a purchase because their preferred payment method wasn’t offered as an option. The report also found that more than 34% of B2B buyers couldn’t complete an online credit purchase.
Common B2B Payment Methods
Paper checks, ACH payments, wire transfers, credit cards, and cash are the most prevalent B2B payment methods.
The table below explores the advantages and disadvantages of common B2B payment methods.
Top B2B Payment Trends in 2022
Alt-text: b2b payment trends
The landscape of B2B purchasing has evolved dramatically over the last few years. The evolution has been fueled by the changing demands of the workforce, shifts in sales channel strategy, and the availability of eCommerce technology and associated services.
In a span of two years—from 2020 to 2022—there have been notable shifts in sales strategies and B2B payments trends.
Here are the top B2B payment trends today:
- Digitalization: The Covid-19 pandemic, which started in 2020, accelerated digitization as purchasing and payment moved online.
- Consumerization: Since eCommerce payments have focused on the consumer segment until recently, B2B payments mirror the consumer experience.
- Personalization: B2B merchants providing online checkout services are going for a personalized user experience for the buying team. For example, they may suggest relevant products, save a cart, keep a wishlist, and so on.
A Checklist for Transitioning to eCommerce Payments
Transitioning to eCommerce payments can be daunting for businesses. However, when properly executed, a sound online payment strategy will enable smoother transactions, resulting in lower overheads and more revenue.
The table below provides a guide on what to look for when selecting B2B payment options. We have categorized the checklist by effort level to suit your specific business’s needs.
Create an Effective B2B eCommerce Payments Strategy With Pivofy
As the evolution of B2B eCommerce payments continues, more and more companies are rolling out, optimizing, and maximizing their ePayment presence. A sound eCommerce payment strategy can be difficult to create and execute. That’s where Pivofy experts can help you.
Our goal is to help B2B companies build strong foundations with their digital transformation, including choosing and implementing an effective eCommerce payment strategy. We’ll help you incorporate custom payment, deposits, financing, and installments options to give your customers a seamless checkout experience that will keep them coming back. We can revolutionize your operations and push your business to new heights, whether you're just getting started or have a lengthy history of selling online.
As a Shopify partner, we’re leading industry experts who take pride in being ethical, transparent and dedicated to giving our clients only the best. Don’t take our word for it—take a look at testimonials from our clients:
“Pivofy offered a good balance of experience and value. They have a direct style and ability to propose multiple concise options to solve a problem or address a need.”
Julian Fernau, Founder of fluidfreeride
To get the ball rolling, contact Pivofy and let us help you create the perfect eCommerce payment strategy.