The complexity of the business-to-business (B2B) space is primarily what causes it to lag consumer-facing innovations.
B2B transactions and the regulations they are subject to have unique and elaborate characteristics that make digitization and automation complex, and these intricacies are amplified even further when cross-border, multicurrency trade is being conducted.
But as can be seen by the rise of online B2B marketplaces, just because the B2B landscape lags the consumer one does not mean that it doesn’t come to eventually resemble it.
And while the global shift toward B2B eCommerce is being driven by an urgent need for businesses to diversify their supply chains, as well as the demand for more transparent and efficient procurement processes, at the center of the shift sits digital B2B payments — and crucially the automation of the workflows they are made up of.
Read more: Capturing the $250 Trillion Cross-Border Payments Opportunity
Digital B2B marketplaces, which bring together buyers and sellers from across the world, represent a seamless, efficient and cost-effective way for businesses to procure goods and services. These platforms serve as a vital link in the global trade ecosystem, and their success relies on effective payments.
As PYMNTS has noted, businesses looking to enter foreign markets quickly find that traditional cross-border payments, such as wire transfers, are full of delays and complexities.
According to a recent PYMNTS Intelligence survey, the failure rate for cross-border payments approaches 11%, accounting for $3.8 billion in lost sales in 2023 alone. Within B2B payments, where acceptance costs represent a P&L line item, avoiding payments failures can help to bolster working capital.
Digital procurement is not a new concept, but its reality is becoming possible at scale by rapid advances in technology. Industry observers believe that B2B buyers will soon come to use digital platforms as one-stop shops for accessing arrays of products and services, each driven by analytics and recommendations.
And streamlined and optimized digital B2B marketplaces ultimately require streamlined and optimized digital B2B payments.
“The nice thing about an open payments platform is it gives you flexibility. … If a merchant starts as a U.S. business and wants to expand to another region, they can very easily add a second provider through their existing platform,” Andy McHale, senior director of product and market strategy at Spreedly, told PYMNTS.
PYMNTS Intelligence’s “The Treasury Management Playbook: Spotlight on Cross-Border Payments” found that 59% of Citi’s corporate clients name speed as one of their biggest pain points when it comes to cross-border transactions, followed by 47% who cited cost, and 40% who named transparency as a key area of friction, as tracking and receipt information may be lacking with traditional payments such as wires.
The payments ecosystem is already responding to this need. As PTMNTS reported, payments solutions firm Finzly on Wednesday (Aug. 14) launched a partnership with corporate payments company Corpay. By integrating the two companies’ tech, international payments processing can be more automated, and seamlessly integrated with other domestic accounts and payment rails, the release added, with Finzly’s unified API making it easy to send international payments.
“There are two big things businesses want,” Boost Payment Solutions Founder and CEO Dean M. Leavitt told PYMNTS in an April interview. “The first is cross-border payments mechanisms that are cost-effective and efficient in paying their suppliers abroad. That’s a clear desire on the enterprise B2B level. And the other thing is just broadly digitizing the ways in which businesses pay and get paid.”
Read more: 5 Ideas to Transform Cross-Border Commerce With Blockchain Solutions
Security is a paramount concern in cross-border payments, as the risk of fraud increases with the involvement of multiple jurisdictions and currencies. This can dissuade B2B firms with strong, established and complex go-to-market relationships from looking into the benefits of B2B marketplaces.
Right alongside security sits compliance. Navigating the regulatory landscape of cross-border payments is crucial for online B2B marketplaces, including the need to comply with anti-money laundering, know your customer, and other relevant regulations in the countries where they operate. This compliance not only protects the marketplace from penalties but also enhances trust among users.
“Everything’s going more cross-border and getting regulated, so tax compliance regulation is huge for new business models in new markets,” Sovos CEO Kevin Akeroyd told PYMNTS in an April interview.
And as the global trade landscape continues to evolve, online B2B marketplaces must stay ahead of emerging payment trends and technologies. For example, PYMNTS Intelligence finds that the use of blockchain technology for cross-border payments could offer the potential for faster, cheaper and more secure transactions. Looking ahead, it’s those marketplaces that adopt innovative payment solutions that can differentiate themselves from competitors and provide added value to their users.
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