Everywhere you look, you see it yet you don’t—the paradox of payments: As payment options grow, they also become less visible, disappearing into the workflows that create them. For example, an increasing number of e-tailers offer “Buy Buttons” that bypass the standard shopping cart process. Customer expectations for payments revolve around simplicity and ease of use, and those same demands are creeping into the B2B space. However, the “consumerization” of B2B payments carries a great deal of complexity, particularly when it comes to implementing embedded payments systems.
To learn more about the complex machinery of embedded payments, the importance of creating a seamless B2B customer experience, and other key considerations for adopting embedded finance, PaymentsJournal sat down with Brandon Spear, CEO of TreviPay, and Steve Murphy, Director of Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group.
The rise of e-commerce and e-procurement
Both e-commerce (online shopping) and e-procurement (online acquisition of goods or materials) have been steadily rising over the last decade. According to Mercator research, the combination of the two forms of electronic sales for B2B transactions hit a new projected high of $2.2 trillion dollars in 2020, not including electronic data interchange (EDI), which by itself accounts for additional trillions of dollars. Moreover, since much of the data was collected before work-from-home trends boosted online shopping, the volume of electronic transactions likely jumped much higher in 2021.
The uptick in popularity of B2B electronic payments has spurred advancements in the online customer experience (CX). “These sites are constantly being improved to make the experience closer to a consumer-type interaction,” explained Murphy.
B2B customer expectations are evolving
“Historically, B2B buyers have been pretty uncomplicated,” said Spear. “They kind of deal with just about anything.” However, the tremendous, recent shift towards electronic transactions has caused B2B buyer expectations to resemble that of B2C buyers. Often, when new e-commerce sites launch, the quickest and easiest payment method for them to accept is credit cards, but limiting payments to a single channel will not accommodate surges in new customers. People want simple online shopping experiences, easy onboarding, and multiple payment options.
Conversely, trade credit invoicing and pay-on-terms are the traditionally predominant payment offerings in the B2B landscape. “In most cases, you don’t want to pay on a statement,” Spear said about procurement. “You want to pay on an individual invoice so that you’ve got the choice of saying, ‘I’m paying this invoice but I’m not paying that one because there was an issue with price, delivery, or quantity.’” The ability to smoothly handle disputes is one of the primary reasons procurement and accounts payable departments prefer invoicing.
Suppliers that are well-equipped to flexibly meet the specific needs of their buyers are gaining a disproportionate amount of the market share, according to Spear. “The challenge in B2B always is you don’t have a single stakeholder like you have in the B2C realm,” Spear explained. “You’ve got procurement, you’ve got accounts payable, you might have a subject matter expert or a budget owner… they all might need different sets of data or different ways of interacting with the supplier.”
Moving beyond the “Buy Button”
There are many elements that must be considered to deliver high-quality B2B transaction experiences: dealing with different customer data requirements, creating loyalty and customer incentives such as rebates and discounts, and providing different payment terms and invoice frequencies, among others. All of these offerings can affect the cash flow of a business, as well as impact the ability to manage customer risk. “When you distill this all down,” said Spear, “the end goal has to be: How do you establish or improve the stickiness of the relationship with your buyers?” Keeping the customer front and center can be complicated, but it is the surest way to facilitate business growth.
Many sellers/suppliers are finding the burden of payments optimization falling into their lap. Some might get drawn into the conundrum of buyers only accepting invoices that are uploaded into their individual invoice portal, so that sellers end up with tens or hundreds of buyer-side portals that, if not used, will probably result in late payments. TreviPay has taken a new approach to tackling the process of payment portal optimization. “We invested in robotic process automation [RPA] that essentially allows you to take the data and automatically load it directly into these various portals, eliminating the need for sellers to do that manually” explained Spear. This technology lets sellers deliver what the buyer needs in a smart and cost-efficient way.
Best practices for embedded payments
Embedded payments occur invisibly in the background and are the key to meeting digital-first buyer needs. Uber offers one of the best B2C examples of embedded payments: when you leave the car, you don’t have to do anything physical to complete the transaction, the app just knows the ride is over and the payment goes through. “How do you deliver that notion to the B2B buyer, understanding all of the complexity that goes on around it?” asked Spear. “The short answer is you’ve got to have a lot of infrastructure in place to make sure that it’s quick and easy for the customer to check out.”
In order for businesses to make embedded payments a reality, it is important that they provide several key elements:
- Invoicing and pay-on-terms options
- Quick and transparent customer underwriting
- API- and data-driven infrastructure
- Robust onboarding and other digital-first offerings
- Simple accounts payable processes
- Strong credit application fraud and business identity theft management
Businesses must also account for potential fraud or account takeover. While efficiency draws in customers, lack of security will drive them away. The goal of any B2B embedded payments infrastructure should be to marry speed and security so the customer can securely create a shopping cart, select their invoice, select their payment option, and be done in a minimum number of clicks. That process is supported by data aggregation in the background, informing where the data needs to go.
While there are common standards for implementing embedded payments, there may also be differences between businesses and industries. “If you’re somebody selling electronic equipment – clearly a very easy item to resell – if it’s ‘stolen’ then you have to be particularly careful,” Spear pointed out. On the other hand, “If you’re selling parts for wind turbines, you’re probably not going to get a lot of fraud.”
Additionally, if sellers have longstanding relationships with their customers, they will prioritize different processes than sellers that deal with one-off buyers; offering a variety of payment options will be more important for fostering loyalty with repeat customers, whereas credit cards work perfectly fine in an infrequent use model. “Understand what your customers care about,” Spear concluded, “and then make sure you’re able to meet those needs.”