B2B Payments Market

Market Overview

The global B2B payments market size was valued at USD 1,029 billion in 2021. It is projected to reach USD 2,242 billion by 2030, growing at a CAGR of 8.9% during the forecast period (2022–2030). 

Business-to-business (B2B) payment facilitates secure 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 a one-time or recurring transaction depending on the contractual agreement 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.

The B2B payment system's demand among business owners for networking and interacting with different suppliers, wholesalers, and retailers worldwide has accelerated due to the system's rapid digitalization and automation. 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 B2B payments market.

Market Dynamics

What Factors are Influential in the B2B Payments Market?

• Growth and Expansion of Businesses

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.

• Use of Technology in the B2B Payment

The market for B2B payments has been growing rapidly due to technological advancements that enable trusted and safe corporate transactions. Instead of using the conventional technique of making and receiving payments, business owners are moving towards technology-based B2B payment platforms. Additionally, the automation of the payment system has increased business owners' need for it to network and communicate with different suppliers, wholesalers, and retailers throughout the world. B2B payments made through the automated clearing house (ACH) are quicker and more effective than payments made through more conventional channels. A routing number and bank accounts are used to transfer this transaction from one entity to another electronically. Therefore, technological development in the B2B payment space will drive market expansion during the anticipated time.

Global B2B Payments Market Restraint

• Business Losses and Discontinuation

In the wake of the COVID-19 pandemic, loss in the business due to a decline in demand for products and services, change in preference of customers, and others have led to a reduction in B2B payment. In addition, discontinuation of businesses across several industry verticals and limited trading of goods and services is another major factor that hampers the market growth. Moreover, several companies do not have the required funds to make payments to the suppliers, which negatively affects the B2B payment market growth.

Global B2B Payments Market Opportunities

• Digitalization of the Payment System

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.

Segmental Analysis

The global B2B payments market share is segmented by payment type, model, enterprise size, industry vertical, and region. 

• Insights Into Type

Based on type, the global B2B payments market is segmented into Domestic and Cross-Border Payments.

The Domestic Payments segment is the highest contributor to the market and is estimated to grow at a CAGR of 10.2% during the forecast period. The B2B payment technology offers several benefits, such as reduced payment transaction charges and improvement of the organization's sales to domestic business owners, which drives the market's growth. In addition, the rise in the adoption of cash in advance payment technology such as credit cards for purchasing products from domestic businesses propels the development of the market in this segment.

The Cross-Border Payments segment is the fastest growing. An increase in the financial security of international payment, availability of multicurrency conversion technology, and limited stringent rules for cross-border product sales are critical factors that accelerate the market growth. 

• Insights Into Platform

Based on the platform, the global B2B payments market is segmented into Traditional and Digital.

The Conventional mode of payment is the highest contributor to the market and is estimated to grow at a CAGR of 8.2% during the forecast period. Cash is one of the most acceptable and hassle-free payment systems across several businesses. Thus most business owners have accepted the cash payment process to streamline the money transaction service, which drives the market's growth. Additionally, there is an increase in the adoption of traditional payment methods among the healthcare, manufacturing, and hospitality industries attributable to benefits such as no credit card fees, receiving money immediately and reducing fraudulent activities. This boosts the growth of the market. 

The Digital segment is the fastest growing. There is increased adoption of digital payment technology among the business owner along with several benefits such as security to financial data and easy access to payment information, accelerating the market growth. In addition, the development of data-rich and integrated card-based payment platforms and the increase in availability and adoption of virtual payment solutions are crucial factors boosting the adoption of B2B payment platforms among business owners. 

• Insights Into Enterprise Size

Based on enterprise size, the global B2B payments market is divided into Large, Medium-Sized, and Small-Sized Enterprises.

Large Enterprises are the highest contributor to the market and are estimated to grow at a CAGR of 8.8% during the forecast period. Several B2B payment solution providers across China, Japan, and India have launched innovative payment platforms for large enterprises. For instance, in August 2020, PayMate, one of India's leading payment solution providers, launched a B2B payments platform named a full-stack supply chain payments automation platform. It helps large enterprises to improve the payment transaction process to raw product distributors. This is considered essential in accelerating the B2B market among large businesses. 

Small-Sized Enterprise is the fastest-growing segment. The rise in B2B payment technology adoption among small-sized enterprises for improving business efficiencies, streamlining business operations, and managing delegated payment policies drives the market's growth. In addition, small-sized organizations in the healthcare, BFSI, and manufacturing sectors are adopting contactless payment technology, accelerating the market's growth. 

Medium-Sized Enterprises are the second-largest segment. The development of the B2B payment ecosystem has been fueled by digital advances within middle-sized businesses, as well as shifting market infrastructure and changing market demand. Digital marketplaces have been alluring to wholesalers, distributors, and manufacturers from various industries. Therefore, middle-sized enterprises are adopting digitalized modes of payments to increase business efficiency and cash flow. In addition, payment gateways facilitate easy and faster financial transactions, including subscription-based and one-time payments processed by a third party. These factors help to enhance the B2B payments for middle-sized enterprises. Therefore, these factors are the key market trends for B2B payments for middle-sized enterprises.

• Insights Into Industry Vertical

Based on industry vertical, the global B2B payments market is segmented into Manufacturing, IT & Telecom, Metals & Mining, Energy & Utilities, BFSI, and Others.

The Manufacturing industry is the highest contributor to the market and is estimated to grow at a CAGR of 9.1% during the forecast period. The significant factors projected to drive the global B2B payment market growth in the manufacturing industry are a gradual increase in income and manufacturer spending on raw materials. In addition, the increase in the adoption of B2B payment technology among the manufacturer offers numerous benefits such as accepting multiple payment processes such as checks, fully customized payment processes, and making every invoice payable online. Moreover, approving payments for all suppliers regardless of location and paying providers through electronic methods without managing sensitive banking information are crucial factors that boost the adoption of B2B payment technology in the manufacturing industry.

The BFSI industry is the fastest growing. B2B payment technology allows business owners to transfer money to raw material supplies through various bank channels such as checks, which drives the market growth in this segment. In addition, several banks and financial service companies have partnered to deliver the B2B payment system to commercial customers. For instance, in April 2021, Mastercard, one of the leading financial service providers across the globe, partnered with HSBC to provide B2B payment technology to the bank's commercial customers in the UAE. This partnership launched a Mastercard track business payment service that provides a B2B payment service for HSBC business customers in the UAE. More such alliances have occurred globally, driving the market's growth in this segment.

IT & telecom is the second-largest industry. Increased security of corporate owners' financial information from cyber-attack and advanced analytic tools such as machine learning technology to payment business are crucial factors that boost the adoption of B2B payment technology in this segment. In addition, B2B payment solutions offer the telecom industry several applications, such as collecting online payments through a virtual terminal, eliminating the process of sending invoices by mail, and waiting for checks to be returned in the mail, which drives the growth of the market in this segment. 

Regional Analysis

Based on regions, the global B2B payments market share is analyzed across North America, Europe, Asia-Pacific, and LAMEA.

What is the Performance of the B2B Payments Market in Different Geographical Regions?

Asia-Pacific is the highest shareholder 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 by 2030, growing at a CAGR of 9.4%. 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. In addition, several banks and financial institutions have partnered with payment technology providers to offer digital payment services to corporate clients. Moreover, the increase in the adoption of online payment cards and mobile wallets among the merchant to purchase goods from wholesalers is expected to provide lucrative opportunities to the companies supplying B2B payment technology in the upcoming years.

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. 

Recent Developments

• June 2022 - PayPal Holdings Inc. announced it is expanding its suite of credit offerings to include a new business credit card better to meet the everyday financing needs of small business owners. The PayPal Business Cashback Mastercard, issued by WebBank and powered by the Mastercard network, is the first business credit card offered through PayPal. The card has no annual fee and rewards cardholders with 2% cashback on all purchases with no rewards earning caps or expiration, making it among the highest cash back rewards value available.
• June 2022 - The newest buy-now, a pay-later product from WebBank, PayPal Pay Monthly1, was unveiled by PayPal Holdings, Inc. It allows American consumers to spread payments out over more extended periods. Customers will now have access to a new PayPal product through Pay Monthly, which enables them more flexibility and payment options for the goods they want and need.

B2B Payments Market Segmentation

By Payment Type

• Domestic Payments
• Cross-Border Payments

By Platform

• Traditional
• Digital

By Payment Method

• Wire
• ACH
• Cheque
• Cash
• Credit card
• Demand Draft

By Enterprise Size

• Large Enterprises
• Medium-sized Enterprises
• Small-sized Enterprises

By Industry Vertical

• Manufacturing
• IT & Telecom
• Metals & Mining
• Energy & utilities
• BFSI

By Regions

• North America
• Europe
• Asia-Pacific
• LAMEA