Business-to-Business (B2B) payments represent a significant upside growth opportunity for fintech vendors. While many businesses have been transferring funds to each other for a long time, the typical process remains difficult to navigate due to the many workflow challenges.
B2B payments can take a variety of forms ranging from basic cash payments to sophisticated instruments like virtual cards, which solve the problems of B2B payments to varying degrees, but some core challenges remain.
The ever-greater use of process automation is also a key trend within the B2B payments arena and represents a potential solution if the underlying payment systems can support the necessary elements.
B2B Payments Market Development
The Juniper analysts found that the need to automate B2B payments at scale is leading to a fundamental shift in the way online payments are made across the globe. That transition creates broad market implications.
B2B payments can take a variety of forms ranging from basic cash payments to sophisticated instruments like virtual cards, which solve the problems of B2B payments to varying degrees, but some core challenges remain.
The ever-greater use of process automation is also a key trend within the B2B payments arena and represents a potential solution if the underlying payment systems can support the necessary elements.
B2B Payments Market Development
According to the latest worldwide market study by Juniper Research, the transaction value of B2B domestic payments across payment methods will exceed $54 trillion in 2023 -- that's up from $49 trillion in 2021.
The research findings predict a growth rate of 10 percent, reflecting a slow recovery in business activity following the ongoing impact of the COVID-19 pandemic.
Juniper identified that while many businesses are now operating at pre-pandemic levels, the longer-term economic consequences of the global pandemic are still restricting value growth.
Juniper identified that while many businesses are now operating at pre-pandemic levels, the longer-term economic consequences of the global pandemic are still restricting value growth.
According to the Juniper assessment, leveraging payment process automation to reduce manual work --thereby boosting small business cash flow -- will be critical to the global economic recovery.
The Juniper analysts found that the need to automate B2B payments at scale is leading to a fundamental shift in the way online payments are made across the globe. That transition creates broad market implications.
Juniper now forecasts that the volume of B2B domestic cheque payments will fall by 30 percent globally between 2021 and 2023, with cash payments falling by 11 percent over the same period.
The need to automate payments means a shift towards more easily automated payment types, such as corporate cards and instant payments. Current manual processes have created some inertia in this market.
"The pandemic has accelerated the transition away from traditional payment types, with growth focused on instant payments and card payments. This transition will be important for automation, but will take some time, given the established nature of these processes," said Nick Maynard, head of research at Juniper Research.
Outlook for B2B Payment Applications Growth
The research found that by 2023, global instant payment transaction volumes in the B2B domestic channel will grow by 56 percent -- that's the fastest of any single payment method.
"The pandemic has accelerated the transition away from traditional payment types, with growth focused on instant payments and card payments. This transition will be important for automation, but will take some time, given the established nature of these processes," said Nick Maynard, head of research at Juniper Research.
Outlook for B2B Payment Applications Growth
The research found that by 2023, global instant payment transaction volumes in the B2B domestic channel will grow by 56 percent -- that's the fastest of any single payment method.
The market study identified the launch of instant payment programs that can carry additional remittance data as having significant potential for simplifying the complex B2B payments ecosystem.
However, Juniper's analysts acknowledged the uneven state of instant payments program roll-outs as a critical limiting factor, with Europe currently moving much faster than North America.
That said, I anticipate more fintech start-ups could enter this emerging market with new disruptive business models that apply technology innovation to displace the incumbent financial service providers.