B2B payments, in the digital age, might owe a lot to that 18th century giant of economics, Adam Smith.
Nowhere has that been more evident than in the last two years, when the pandemic has stirred up innovations, particularly in payments, and in eCommerce in particular.
“The consumers and the businesses had no alternative than to start buying and selling in ways that would have otherwise taken them a lot longer,” he said.
For the vast majority of businesses, especially in B2B, where midmarket and even larger firms have had to move from the analog world to eCommerce in full-fledged pivots — just as is the case with consumer payments — providing options and choice is important.
As Bellm told Webster, “We’ve all changed. Consumers and businesses have been forced to learn new ways of doing business and new ways of doing it all online. And we now are experiencing the joy and the ease and the efficiency of that.”
Speaking about payments in general, he said that “we are in the most interesting time of payments evolution in the last 20 years.”
The blistering pace of innovations comes off a relatively long lull. In 2003, with the advent of Amazon’s one-click checkout, to 2018, with PayPal’s digital wallet (where consumers can reuse their financial information securely across merchant sites), improvements in eCommerce were merely incremental.
But in the past five years, he said, there have been two “explosions” in payments. The first seismic shift came with the expiration of Amazon’s One-Click patent.
That’s helped lead the way to the displacement of accounts with logins as the means by which a wallet or an individual merchant website stores financial information for reuse with two-factor authentication.
“So, what we’re seeing now [with those businesses] is what you can do on Amazon, which is to go back and repurchase things, quickly, now happening on sites without requiring the creation of an account or the login to an account,” said Bellm.
The end result is a streamlined process that applies to merchants who have been visited only once by a consumer — or merchants operating in the same network.
And as Bellm said, the future of checkout is one where we won’t have to create or remember individual passwords and accounts at merchant websites — anachronistic processes that introduce friction between merchant and consumer.
The other monumental change rests with the explosive growth of buy now, pay later (BNPL) — of non-bank players providing installment credit options for consumers.
See our report: The Truth About BNPL And Store Cards
The Connected Economy
Writ large, with speedier checkout and offers extended in the midst of the transaction, and with social media added into the mix, the runway to the connected economy takes shape.
Getting there will be determined in part by the network effects of the individual payment processors and whether they’ve latched on to two-factor authentication and integrated it into their customer journeys.
As an illustrative example, a Braintree, a Stripe, a Chase, an Adyen could incorporate their multifactor authentication options into platforms like BigCommerce — which in turn allows the merchants to turn on one-click checkout.
“Our merchants just pick whichever provider they want to use, but the products are already set up to work in those optimal ways,” said Bellm, “and they don’t have to do any engineering work.”
Translating to B2B
“The customer experience is being redefined by the expectations that business buyers, who are themselves consumers, are getting from B2C sites,” he said.
That means that they want attractive, logical online experiences as they browse, source and pay for the goods and services that keep commercial commerce humming. As to the efficiencies, he said that the digital experience is one that addresses B2B specific functionalities — such as hierarchies, approval processes and invoices.
He pointed to the recent BigCommerce acquisition of Bundle B2B, coming on the heels of the B2B Ninja buy, as boosting the platform’s ability to deliver eCommerce functionality to the B2B setting. It becomes easier for administrators to extend purchasing rights to their employees and fast-track approval processes.
“A half dozen of the most popular B2B capabilities are now being integrated, natively, into BigCommerce,” he said.
The shift to platforms, with a range of plug-and-play services on offer in B2B, he said, is critical. There’s a range of complexity involved in mimicking the ease of B2C eCommerce.
B2B transactions are themselves more complex than B2C. Among those many flavors of commerce: A business can sell to another business, directly, of course. A consumer goods company can sell to a wholesaler, or to retailers. There’s also the direct-to-consumer model.
They could be selling raw materials — or finished goods. But no matter the vertical and no matter the B2B relationship, he said, a few common aspirational goals emerge across the platform model (seen with BigCommerce and others).
“There is a lot a variability,” he said, “as many of these payments will be done offline — often winding through legacy processes and systems.” But, he said, the more that can be automated, the smoother and faster the experience will be.
Ideally, at the point of checkout, a business buyer would be able to instantly authorize a bank-based payment.
The seller would, in turn, give that buyer an incentive or discount to pay upfront immediately to avoid the costs and delays tied to waiting for funds to settle, typically within several days. The typical back and forth of generating, presenting and paying invoices.
In this way, payments used between trading partners exists as a way to establish a more collaborative working relationship — monetizing that exchange.
“What I want to see happen is that the leading payments players in the world of card acceptance come out with easy-to-use ACH-facilitated payments — where they are not trying to capture the same 3% that they do off cards,” he said.
The conversation with Webster came against the backdrop of BigCommerce’s most recent earnings results, where Bellm said during the conference call that B2B would be as much as 40% of platform spend — and growth is outpacing activity seen in B2C. BigCommerce, he said, enables those clients to leverage digital tools to create consumer-like B2B shopping experiences — and even tailor experiences for each individual customer (with online catalogs, pricing, etc.). Payments are integrated into the process, as are invoicing and payment terms.
Thus there lies the opportunity to monetize speed, in helping bring buyers and suppliers together to decide how they want to move money between enterprises with that functionality integrated into ERPs.
“There should not be a choice between credit card ‘only’ with its minimum 2% interchange tax — or if you want to pay by bank, you have to deal with checks or some other payment ‘off’ platform,” he said. He posited that 36 cents and no percentage of the transaction should be the “going rate,” he said.
Suppliers will often choose to take a discount in order to be paid sooner, and especially instantly. Sidestepping the several days it takes ACH transactions to settle, after all, can improve cash flow visibility.
What Comes Next
As we look out to the end of the year and beyond, Bellm said, the spending on eCommerce websites by B2C sellers is growing at 8% for the next five years. But it’s growing at 16% for B2B, across the platforms that help modernize and speed transactions, in collaborative fashion between buyers and suppliers.
“B2B firms are making up for lost time,” he said. “The industry was slower to adapt but they’re coming on fast.”