3 Credit Risk Challenges for e-Merchants with Diverse Payment Options

21 December 2022
The global B2B e-commerce market is six times larger than that of B2C. It is projected to grow at 17% CAGR until 2027 with market size reaching EUR21 trillion. While 95% of B2B buyers prefer paying on credit terms just as they are able to when buying offline, however, only less than 10% of e-merchants offer such option. As research shows that 29% of buyers opt to abandon their shopping carts if their preferred payment option is not available, e-merchants are hurrying to bridge this gap. 

What are the challenges faced by e-merchants in offering deferred payment terms such as buy-now-pay-later (BNPL)?

Unlike traditional sales, selling online and offering deferring payment options mean that e-merchants will be selling to a large number of unknown buyers, drastically raising their need for improved credit score intelligence and risk mitigation. Typically speaking, credit insurers are usually involved in order to provide cover for payment risks arising from these transactions.

In recent years, the line between online and offline is no longer distinct. For e-merchants, the ability to offer the same in-store experience and services to online shoppers becomes the game-changer. To prevent dampening shoppers’ experience, e-merchants are expected to offer these payment terms in real-time at check-out with high acceptance rate, so as to maximize conversion rates and upsell opportunities.
In addition to higher costs for covering credit and fraudulent risks, e-merchants will also need to bear credit card fees as well. As non-payments would make a significant impact on the P&L, high quality credit check and coverage is imperative for e-merchant to safely maximize their sales revenue with peace of mind.

Allianz Trade’s E-commerce Credit Insurance is a simple plug-and-insure solution to protect and grow your online B2B business with a BNPL insurance solution. With BNPL solution for business, you can safely and automatically propose payment terms in real-time to your customers. If your customer does not pay, we will cover your loss.

We offer easy integration into online sales and payment term processes, with 24/7 real-time insurance decision with perfect integration to your workflows. In additional to automated credit assessment, we also provide debt collection services should a customer default.

Want to learn more about BNPL risk management? Talk to us today.

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