How Is BNPL Revolutionising B2B E-Commerce Payments?
Rapid advancement in the technological field has ushered in innovative solutions for B2B E-commerce. In India, access to credit posed a major challenge for small and medium-sized businesses.
The rise of the fintech sector has enabled numerous businesses to find a foothold. They offer innovative solutions like BNPL (Buy Now, Pay Later) that solves the cash flow challenges of B2B businesses.
Buy Now, Pay Later in B2B E-Commerce
First, let us take a glance at B2B BNPL. It is a short-term financing option that enables businesses to buy necessary products or services and pay for them at a later date or in instalments. It is generally offered to business buyers at the point of sale. The seller (supplier or merchant) gets the benefit of upfront payment.
Small and medium enterprises are increasingly taking advantage of BNPL to tap into their massive growth potential and level up against more established competitors.
According to financial experts, people need to acknowledge the role played by fintech service providers like KredX, which offers access to credit to startups and facilitates their inclusion in the country’s financial system.
How Does B2B BNPL Work?
In India, experts have estimated that the BNPL market will grow at a CAGR of 24.2% from 2021 to 2028 (1). This massive rise has been driven by the increasing numbers of e-shoppers across the country.
But how does BNPL work in B2B E-Commerce? Let us look at its process at checkout:
- First, the business buyer adds the product or service to their cart.
- Then, they opt for BNPL as their preferred payment method and proceed to check out. The purchaser does not need to make any payment.
- The seller ships the order to the buyer after processing it.
- Note that the B2B BNPL service provider pays the seller in full.
- The fintech company then collects the amount from the purchaser at a later date.
How Is BNPL Revolutionising B2B Payments?
Now, let us look at the way BNPL is revolutionising B2B e-commerce:
Helps Businesses with Low Credit Scores
Businesses with low credit scores often hesitate to approach formal financial institutions such as banks due to their cash flow problems. This is because of the associated formalities and tedious documentation process. However, BNPL offers an effective solution to their cash flow problems. With the product/service received instantly, they can generate more revenues and use it to repay the amount.
Significantly Lowers Cart Abandonment Rate
BNPL financing addresses every problem that increases a seller’s cart abandonment rate. For example, purchasing high-end products instantly is not always possible. With BNPL, businesses can receive the goods/service instantly and split up the amount to pay in instalments later.
Improves AOV of Sellers
An affordable repayment process can induce businesses to purchase more from the same seller. It also builds strong relationships between businesses. With increasing awareness, businesses will also receive new customers who place orders. That is why the B2B BNPL facility can increase the average order value significantly.
Businesses looking for BNPL providers can opt for KredX, whose smooth digital process and instant API integration can help them to integrate this option at point-of-sale.
There has been massive growth in the B2B E-Commerce space. With the fintech sector offering easy credit facilities like BNPL, both buyers and sellers have seen an increase in productivity. It also helps businesses carry on their daily operations without facing a cash crunch.