Business-to-business (B2B) payment facilitates safer transactions for merchants that require routine, periodic transactions and provides various functions to end-users such as receivable accounts, accounts payable, payroll, and acquisition departments. It involves one-time or recurring transactions depending on the contractual agreement made between the buyer and supplier. As B2B payment processing requires more time to approve and settle the transaction, B2B payments are more complex than business-to-consumer or B2C payments.
Rapid digitalization and automation in the B2B payment system have accelerated its demand among business owners in networking and connecting with suppliers, wholesalers, and retailers globally. Moreover, growing global trade and a surge in cross-border transactions involve several suppliers, wholesalers, retailers, and businesses that act as the major driving factors of the global market.
The growth of a business depends on the quality of goods and services provided by the firm. Therefore, companies need to have a strong relationship with the suppliers of goods and services that the firm sells to grow and compete in the market. Maintaining a strong relationship with the supplier means having a better cash flow among the business parties, including wholesalers, retailers, and supply chain managers. Companies are continuously maintaining a stable B2B payment channel to get a better and faster supply of goods and services. Furthermore, expansion in business means dealing with new supply chains for getting different types of goods and services for further selling to customers. Hence, increased development of businesses accelerates the demand for B2B payments which drives the market growth.
Digital B2B payments are overtaking traditional paper checks and cash payment processes, as business owners want real-time updates of the payment transactions. Businesses are demanding from their marketplaces and third-party providers to offer digital systems and payment options. Furthermore, digitalization reduces trade barriers and payment frictions and makes B2B payment possible for paying vendors globally. In addition, digitalization provides transparency in terms of transactions among businesses and reduces the risk associated with B2B payments.
Moreover, unlike the traditional payment methods, digital payments have a low dependency on the working hours of a specific institution or bank, which further benefits buyers with flexible operating hours for receiving payments. Therefore, these factors offer lucrative opportunities for future growth of the B2B payment market.
Asia-Pacific is the highest contributor to the market and is estimated to grow at a CAGR of 11.9% during the forecast period. Several financial technology companies across China, Japan, and India have introduced advanced payment technology to businesses. For instance, in April 2020, Harbour & Hills, one of the leading B2B cross-border payment providers in China, launched a B2B payments gateway that improves the business payment transaction process of corporate sectors, which drives the market's growth in this region. In addition, cheques, bank transfers, demand drafts, and third-party gateways are leading traditional business payment methods widely accepted among businesses across the Asia-Pacific. This is considered an essential factor in boosting the market's growth in this region.
Europe is the second-largest region and is projected to reach USD 640 billion, growing at a CAGR of 9.4% during the forecast period. An increase in adoption of instant payment technology among the business, improvements in commercial cash management systems, and a rise in usage of digital banking services in the corporate sector are some of the crucial factors that boost the adoption of B2B payment technology among the business owners.
North America is the third largest region. Most of the leading payment solution companies across the globe have opened new business offices in the US to offer comprehensive payment services across small-medium enterprises. For instance, in February 2021, Eedenbull, a leading commercial payment card provider, started its new startup in the US. Moreover, it offers commercial payment technology and a commercial payments-as-a-service (CPaaS) portfolio to the banks in North America. Eedenbull provides commercial B2B payment technology to small-sized corporate customers. This is essential in boosting this region's B2B payment market.