Twenty years ago, making a B2B payment meant handing over cash or taking the time to write then mail a check — which was time-consuming and risky.
Online shopping and electronic payments weren't even a blip on the radar for most companies.
Ten years ago, payment methods started to change. According to a 2010 study by the Reserve Bank of Australia, cash remained the most popular form of payment for low-value transactions, but electronic payments systems became the most popular form of payments for high-value transactions.
Today, online shopping is growing rapidly with nearly 96%of Americans shopping online at least once per year.
Consumers are also adopting mobile wallets, like Apple Pay, Samsung Pay, and Alipay. The usage of mobile wallets is expected to continue to rise with a compound annual growth rate of almost 27% between 2020 and 2025.
This all begs the question: Is offering online payment options critical for business success in the coming years? And what challenges do B2B companies, in particular, face when it comes to payment trends?
Challenges for B2B payments
Many B2B marketing managers are eager to integrate the latest payment technologies into their checkout process, but they're also facing a number of challenges that can slow down implementation and create bottlenecks.
1. B2B customers will choose the company that offers a payment system they prefer.
In general, B2B customers choose to purchase from companies that accept payment systems they’re already comfortable using or that work with their current systems.
2. Credit costs are high.
According to WalletHub, the average credit card interest rate is over 18%, which makes it incredibly costly for businesses to make credit purchases.
3. Automation is on the rise.
More companies are relying on machine learning and AI to cut costs. Shifting to automation can increase productivity and reduce costs — but it doesn't work as efficiently when companies rely on paper invoices and physical checks.
Online payments: The future of ecommerce payments
The way we pay is changing on the ecommerce frontier, for both B2C and B2B companies. Consumers prefer more agile digital payment solutions, with options like Apple Pay, Amazon Pay, and PayPal becoming increasingly popular. Even large stores like Target accept payment with just the tap of a smartphone or smartwatch.
Here are three online B2B payment options companies should keep an eye on to stay competitive in the coming years.
1. Mobile wallets
Mobile wallets aren't just for B2C anymore. PayPal's business offering and Bank of America's corporate card integrations with Apple Pay and Google Pay are bringing the convenience of mobile wallet payments to B2B companies. Soon, CEOs could pay for a million-dollar supply order with just the tap of a smartphone.
2. Third-party financing
Third-party financing is when a business uses a third party (not themselves or their vendor) to finance a purchase. For example, a fast-expanding company might use a bank to finance the purchase of supplies for a new product line. They pay their supplier via financing, then make payments to the third party.
While this is nothing new, digital payments could disrupt the process by revolutionizing the way businesses and consumers interact with banks and offer financing without the use of a financial institution.
Cryptocurrency is a virtual currency that is highly secured and encrypted. While cryptocurrency is still in its infancy, it’s worth noting that the U.S. federal government is one of the largest holders of bitcoins — which means there’s a real possibility it could impact our banking systems, and B2B companies, in the coming years.
Why add online payments to your B2B store?
Adding online payments to your B2B store — or increasing the number of payment options you accept — helps decrease purchase friction and can increase conversions. But, those aren't the only reasons businesses need to pay attention to the shifting B2B payment landscape.
Here are a few other considerations to keep in mind:
1. Customers want changes.
Vendors should offer B2B buyers additional payment options beyond credit cards to improve the buying experience. In addition to adding online payments, look for ways to offer custom packages that allow customers to pay the way they want —- and choose packages they can afford.
2. Improve the customer experience.
Using the right payment systems is more than a nice-to-have feature; it’s a growth strategy — when you make it easier for companies to pay, you make more sales. Not sure what payment options your customers want? Create a survey using a mobile form to ask customers and prospects what payment options they’re most comfortable using.
3. A simplified process means faster payments.
The B2B payment process is complex — between invoices, credit checks, and mountains of paperwork, it can take weeks for some businesses to process payments. Using mobile wallets, digital payments, or even third-party financing can allow businesses to close sales and get access to cash much faster.
4. Better data = more revenue.
You can't fix what you don't track. From digital payments to invoicing, machine learning tools are providing companies with access to far more accurate data about inventory, creditworthiness, and payments. This data speeds up the payment process, but it also offers companies access to far more data, which they can use to segment their audience.
The reality is, the online payment industry is changing, and the disruption has the potential to create opportunities for B2B businesses that are paying attention.
Is it worth spending time to figure out if online payment options like cryptocurrency are the right move for your B2B business?
Are online payments right for your B2B company?
Not every payment option, traditional or digital, is the right fit for all B2B companies — or their customers.
There are several factors to consider before deciding what payment methods make the most sense for your business.
1. Do you sell a product or a service?
If you sell a physical product, such as machinery or parts, most customers will expect to pay for the product up front the same way B2C consumers do when they go to a retail store. They may also want access to credit. However, if you provide a service, the customer might expect to pay a small deposit then render full payment either at intervals or when the service is completed.
2. What are the payment fees and expenses?
Take an in-depth look at the expenses and fees associated with your chosen platform before signing up. Most payment platforms charge a percentage fee, but they may tack on monthly or processing fees, or even charge different rates for small versus larger payments.
3. Does it work with other tools your customers use?
As more of the business world goes digital, there’s an increased need for tools that integrate — data analytics programs, CMS, ecommerce tools, and a variety of other programs must all work in sync.
Make sure the payment processor you add to your ecommerce platform works with the systems most of your customers use.
4. Are your customers unhappy with current payment options?
Before you invest time and money to add a new online payment trend, take the time to ask what benefits you’re hoping to see. Do customers want a new payment option? What features are lacking? These answers will help you decide which online payment platform is right for you.
As the business world becomes more reliant on technology and automation, companies must find ways to keep up with changing trends.
Online payments, mobile wallets, cryptocurrency, and other electronic payments are no longer just plots in sci-fi novels — they’re fast becoming legitimate options for B2B companies in a variety of industries, including tech, manufacturing, and health care.
Companies that aren't willing to adapt to the changes in payment technologies are unlikely to survive. Those willing to adapt will find it easier than ever to turn prospects into long-term customers.
I'm an expert in the field of online payments and digital transactions, with a deep understanding of the evolution and trends shaping the landscape. Over the years, I've closely followed the advancements in payment technologies, from the traditional methods to the latest innovations like mobile wallets, third-party financing, and cryptocurrencies. My expertise is grounded in a comprehensive understanding of the challenges faced by businesses, particularly B2B companies, as they navigate the ever-changing payment ecosystem.
The evidence supporting my knowledge includes a thorough grasp of historical transitions in payment methods, such as the shift from cash and checks to electronic payment systems. I'm well-versed in the findings of reputable studies, like the 2010 study by the Reserve Bank of Australia, which highlighted the changing dynamics of payment preferences over time. Additionally, I stay updated on current market trends, evidenced by my awareness of the rapid growth of online shopping and the increasing adoption of mobile wallets among consumers.
Now, let's delve into the concepts discussed in the article:
Evolution of B2B Payments (20 years ago to today):
- Traditional B2B payments involved cash or checks, with a time-consuming and risky process.
- Over the past ten years, electronic payment systems gained popularity, especially for high-value transactions.
- Online shopping is growing rapidly, with almost 96% of Americans shopping online annually.
Challenges for B2B Payments:
- B2B marketing managers face challenges in implementing the latest payment technologies.
- B2B customers prefer companies with payment systems they are comfortable using.
- High credit costs with an average credit card interest rate of over 18%.
- Automation is on the rise, but it faces inefficiencies with paper invoices and physical checks.
Future of Ecommerce Payments:
- Online payments are changing for both B2C and B2B companies.
- Consumers prefer agile digital payment solutions, with options like Apple Pay, Amazon Pay, and PayPal gaining popularity.
Online B2B Payment Options:
- Mobile wallets are expanding to B2B with offerings like PayPal's business services.
- Third-party financing involves using external entities for financing purchases.
- Cryptocurrency, though in its infancy, has the potential to impact banking systems and B2B transactions.
Why Add Online Payments to B2B Stores:
- Increased payment options decrease friction and can boost conversions.
- Offering diverse payment options aligns with customer preferences and improves the buying experience.
- Streamlining the payment process with digital solutions accelerates sales and provides better data for decision-making.
Factors for Choosing Payment Methods:
- Consideration of the nature of the product or service sold.
- Evaluation of payment fees and expenses associated with the chosen platform.
- Compatibility with other tools and systems used by customers.
- Feedback from customers regarding current payment options.
- As technology and automation become integral, businesses must adapt to changing payment trends.
- Online payments, mobile wallets, and cryptocurrencies are becoming essential for B2B companies in various industries.
- Adaptation to evolving payment technologies is crucial for business survival and customer retention.