B2B payments should have the same convenience as B2C payments

In today’s fast-paced global economy, businesses continually seek ways to streamline operations and improve efficiency. One area that often needs to catch up in this pursuit is business-to-business (B2B) payments. While business-to-consumer (B2C) payments have become incredibly convenient and user-friendly, B2B payments still face many challenges, particularly internationally.

B2B payments have been neglected, cross-border B2B payments more so. It is time they caught up.

It is well known that the propensity to pay is inextricably linked to the convenience of payment. Card payments offer payers convenience, but being subject to high fees, slow settlement times and chargebacks remain unattractive to B2B merchants, often operating on low-profit margins. While bank transfers, though cheap and instant, are subject to human error and inertia.

Many companies have successfully focused on improving B2C payments, like PayPal, Stripe, etc, but B2B payments have been neglected, cross-border B2B payments more so. It is time they caught up.  

The challenges of international B2B payments

 With 5.5 million SMEs in the UK and 400 million globally, addressing international payments has emerged as a primary challenge for the fintech industry. Overcoming these five challenges could catalyse enhancing convenience in international B2B payments.

• High transaction costs

Traditional international B2B payments involve hefty transaction fees, foreign exchange mark-ups, and intermediary bank charges. These costs can significantly eat into a business’ profit margins. High-street banks tend to charge at least 1.5% per international payment!

• Lengthy processing times

International B2B payments are notorious for their slow processing times, leading to delayed deliveries, cash flow management issues, strained relationships, and missed opportunities. It can take up to five days for an international bank transfer to settle!

• Compliance and regulation

Navigating the complex web of international regulations and compliance requirements is a significant headache for businesses engaged in cross-border trade.

• Limited visibility

Tracking payments across multiple platforms and currencies can be a logistical nightmare, leading to uncertainty and potential errors in financial reporting.

• Security concerns

The risk of fraud and data breaches in B2B payments is a constant concern, with businesses needing to implement robust security measures to protect their assets.

Why should B2B payments match B2C convenience?

The value of international payments is set to increase from $150 trillion to $250 trillion by 2027, according to the Bank of England.

With such remarkable growth, it is only a matter of time before convenience significantly improves. This advancement is expected to enable SMEs to concentrate more on their core business activities, simultaneously diminishing costs and time allocated to payment processes.

• Enhanced efficiency

Streamlining B2B payments would result in quicker transactions and reduced administrative overhead, freeing resources for more strategic endeavours.

• Cost savings

Lower transaction costs and more competitive foreign exchange rates would contribute to significant cost savings for businesses engaged in international trade.

• Improved cash flow

Faster payments enable better cash flow management, helping businesses meet their financial obligations and invest in growth opportunities.

• Enhanced relationships

Smooth and hassle-free payment processes foster better relationships between businesses, strengthening partnerships and encouraging repeat business.

• Competitive advantage

Companies that offer convenient B2B payment solutions are more likely to attract and retain clients, gaining a competitive edge in the market.

How is Crezco fixing this problem?

Account-to-account payments (A2A) are the future, but they only work on domestic payment rails, like the UK’s Faster Payments solution, the EU’s SEPA and FedACH in the US. Crezco connects these domestic payment rails to one single B2B payment product. As a result, businesses can now collect and make account-to-account payments in 37 currencies in 180 countries more conveniently and securely for a slight 0.3% fee. 

Card payments have undergone decades of iterative developments and improvements to make them more universally accessible. Crezco is doing the same with A2A payments. Now, users can send money directly from their primary FSCS-protected bank account in their local currency to a supplier’s or employee’s bank account in their desired currency without pre-funding an external account. This technological revolution disintermediates previous payment-tech products dependent upon e-wallets or virtual IBANs.

Open banking is a paradigm shift in the deliverance of financial services, which will continue to grow in popularity both domestically and globally until it is as commonly understood and accessed as the worldwide web.

Sponsored by Crezco, the winner of the Tech of the Future – UK & Europe award and highly commended in the PayTech Start-up of the Year category at the PayTech Awards 2023