Buy-Bay-Pay-Later Smes provides alternative credit.
Although it is generally available in the consumer market for a period of time, the electronic payment model for the Buy-Pay-Later (BNPL) finally carries the fruits of small, small and medium enterprises by avoiding interest payments on corporate credit cards Reducing papers, facilitating faster transactions, and improving liquidity management.
BNPL operates from B2B) similar to the BNPL treatment from business to consumer (B2C). After a third party operates a credit check and assumes the risk of credit for non -payment, the buyer can delay payment for a specific period, a full payment or installments.
Using B2B BNPL, avoid MSMES clicking on their credit lines to pay bills and avoid commercial credit negotiations. For suppliers, it works like the reverse opposite, as the buyer uses a third party to pay the bill immediately and pay the third -party financing later.
Many small and medium -sized companies in sectors such as retail, manufacturing, and early technology have become B2B BNPL, according to Argon Singh, partner and international president of Fintech, the practice of financial services in Arthur D. Little (ADL). “In addition, the markets are increasingly integrated B2B BNPL as part of the compact financing and financial innovation strategies, helping companies face liquidity challenges and simplifying payments.”
The travel and hospitality industry has also decreased in the new payment model led by their short -term and seasonal needs, adds Nilesh Vaidya, the global head of banking services and capital markets in Capgemini. “Restaurants have faced a difficult tour in the past two years, and they are looking for this credit. So they are. They want to get this type of loan faster, which is an interesting work for banks.”
The areas where the B2C and B2B BNPL diverges are the merit, the size of the market and the customer base. The B2B BNPL sector is located in its beginning compared to the B2C BNPL sector, which has benefited from excessive growth of e -commerce and an increasing base of young users with a small or non -credit history.
“It has become necessary not only in retail sale but through various sectors,” Singh says. “According to some estimates, B2C BNPL accounts for about 5 % of global e -commerce spending.”
The travel and hospitality industry has also decreased in the new payment model led by their short -term and seasonal needs, adds Nilesh Vaidya, the global head of banking services and capital markets in Capgemini. “Restaurants have faced a difficult tour in the past two years, and they are looking for this credit. So they are. They want to get this type of loan faster, which is an interesting work for banks.”
The areas where the B2C and B2B BNPL diverges are the merit, the size of the market and the customer base. The B2B BNPL sector is located in its beginning compared to the B2C BNPL sector, which has benefited from excessive growth of e -commerce and an increasing base of young users with a small or non -credit history.
“It has become necessary not only in retail sale but through various sectors,” Singh says. “According to some estimates, B2C BNPL accounts for about 5 % of global e -commerce spending.”
On the other hand, B2B BNPL is a sleeping giant ready to wake up. It is driven by larger transactions and is often more complicated. Authors of the view published by ADL estimated that B2B BNPL will get 15 % to 20 % of all B2B payments by the end of the contract.
“This would equal approximately $ 25 to 30 trillion dollars, and assuming the average BNPL fee by 3 % -4 % for each transaction, a total processing market ranging between 700 billion dollars and 1.3 trillion dollars,” they wrote.
Geographically, BNPL is a global phenomenon available in about 80 markets, as the Asian and Pacific markets lead to its adoption in China and South Asia, such as Malaysia, Indonesia and Singapore, according to Vaidya. After that, we saw a lot of app in Europe because immediate access to payment is better. In the United States, there were many new BNPL providers. “
Where credit is due
The BNPL model will not work without taking third parties to non -payment credit risks. Fintechs – like Clarna Sweden, Authoria after birth, and America’s assertion – has made a path of B2C BNPL, as it acquired a large share in the market with the expansion of its offers.
However, Vaidya from Capgemini notes that banks are likely to dominate the B2B BNPL market.
“Klarna and Afterpay have many retail customers, and individuals who buy in shopping and retail centers in shopping centers or in an online electronic commerce store,” he says. “The banks work better in the small and medium -sized institutions sector.”
While Fintechs continues to crack in the B2B market, banks already have current financial relationships with MSMES and their suppliers and provide them with another way to provide credit to their commercial customers. This is particularly applied to companies that have revenues in a range between 20 and 50 million dollars, and he was having difficulty obtaining small ticket loans historically.
However, the results of financial institutions are not all pink. B2B BNPL Business comes at the expense of commercial credit card fees and those created by the bank’s business lines and vice versa.
“In the past, the company will go and buy something on the commercial credit card, and the bank will generate fees on the transaction,” explains Vaidya. “When the immediate payment option is possible, they can pay their suppliers directly as they do not need credit. So banks need to do something.”
The banks have become great with B2B BNPL offers. The Giants of World Banks, Panco Santander and BNP Paribas, started providing their BNPL services to their multinational adult customers in 2023 through partnerships with payment platforms and commercial insurance providers. Banco Santander Corporate Investment Bank has launched the Turnely service, which includes the payment platform of Net-TETMS infrastructure, insurance broker services, Spain and Allianz Trade’s credit.
“The fact that buyers should use personal credit cards or companies still hinder the B2B transactions. Enabling companies will be to maintain payment habits within 30 or 60 days of their bills in the e -commerce environment as a great discrimination to the sellers with the addition of a great change to the game: is now removed All concerns about the risk of non -payment, and their cash flow said Ignacio Frutos Lopez, the global next next Banco Santander CIB at the time of launch, was preserved at all times.
Three months later, BNP Paribas launched its service in partnership with Hokodo, a B2B payment platform that can integrate with exit platforms through the application programming interface. The service provides credit decisions in actual time, financing transactions, credit and fraud insurance, and collection capabilities.
Make a feet
Despite its potential growth, B2B BNPL still has some obstacles to overcoming them. According to ADL, consciousness and organization of customers are the main concerns, followed by risk assessment, product structures, cross -border trade issues, integration of technology, costs and competition.
“A large part of the target market should be taught about the benefits and risks of the proposal,” says Singh from ADL.
According to the research conducted by Capgemini, the expected adoption rate for BNPL will remain fixed over the next two years. In a study of e -commerce shares by the exit method, BNPL got a 5 % stake in 2023 and is expected to have a 5 % stake in 2027 to 15 % share during the same period.
As the entire BNPL market increases, organizers invest more effort to process BNPL offers as separate from the long -term model loans. However, according to Eric Metzenmar, a partner at Mair Brown Law Company, BNPL’s regulations remain emerging in many judicial states.
“The United States – although it is a fertile market for BNPL offers due to the size of its economy and some useful regulatory factors – is one of the most complicated and sophisticated regulatory environments for BNPLS.” “Many other judicial states currently have more lenient environments for BNPL, especially for BNPLS provided to small and medium -sized companies against consumers, with a possible exception than BNPLS offered by banks and financial institutions that are organized similarly.”
“Unlike consumer credit, which enjoys a relatively uniform regulation across the judicial states, commercial and commercial lending regulations are varied and fragmented, and lacks the same clarity-especially in scenarios across the border,” Singh agrees.
Even with these obstacles, Singh expects that B2B BNPL will have a similar adoption curve as his consumer counterpart and traction acquisition across multiple sectors and types of transactions. “As trade continues to unify through the channels and customers ask for a greater specialization, the access to the B2B BNPL will expand significantly, providing companies increasing flexibility and financial options.”
