Buy Now, Pay Later: it’s a consumer financing model that has become indispensable to the success of B2C websites. By offering consumers the prospect of delaying their payments – at no extra cost to them – retailers can dramatically boost e-commerce conversion rates and keep customers coming back for more (as long as customers pass an instant credit check, of course).
It’s a phenomenon that’s now gaining momentum in the world of business-to-business e-commerce, where merchants still typically require customers to pay in full with a card at checkout rather than via the kinds of deferred payment methods – such as net 30 or 60 days – that are the hallmarks of offline B2B trade.
So what kind of capabilities and business advantages give B2B e-merchants the confidence to grasp the BNPL opportunity? Here are four compelling features that are driving BNPL adoption:
1. Real-time, automatic credit decisions
To date, most merchants have shied away from providing trade credit simply because it seems too risky. Their caution is understandable: in many cases, their online channels draw in a much wider set of customers, many of whom they’ve never dealt with before. That’s in sharp contrast to the wholesalers who they have built trusted trading relationships with in a more traditional, offline business settings.
As a result, when considering the option of offering payment-on-invoice or other terms, they have had to weigh the higher risk of non-payment – and the administrative overheads that accompany those – against the benefits of offering BNPL.
The good news is that the challenge is now being addressed by the market leader in trade credit insurance, Allianz Trade. By combining real-time checks on the creditworthiness of B2B customers with robust E-Commerce Credit Insurance API, merchants that sell online can offer BNPL with confidence.
Here’s how that looks in practice. As a customer adds items to their cart on your website, their financial health is analyzed in real-time by connecting to our global databases of business creditworthiness, which contain financial, strategic, and commercial information on more than 80 million companies worldwide. The speed of that analysis provides automated trade credit decisions so you can instantly offer the most appropriate credit terms to your customer – with confidence. Should you need to receive an instant payment to ease your cash flow, Allianz Trade is partnering with BNPL providers that can provide early payment as well.
2. Higher e-commerce conversion rates at checkout
There’s plenty of evidence to suggest that an absence of purchase trade credit for B2B e-commerce customers makes buyers think twice about the timing and affordability of their purchases, especially when contemplating large or complex business transactions. Different estimates suggest that as many as 50% of B2B buyers have abandoned orders at checkout having found out that the only option was to pay by card.1
By implementing B2B BNPL capabilities, backed by E-Commerce Credit Insurance, as many as 90% of your customers are likely to be offered payment terms. And early adopters of Allianz Trade’s solutions for BNPL report e-commerce conversion rates of up to 40%.2 The result: maximized revenue opportunities and a boost to your business.
3. Fuller carts and more repeat customers
By offering your B2B customers the option to defer payments, you help to enhance their cash flow and smooth their decision-making processes, often allowing them to make more purchases.
BNPL platform companies such as Two observe that sellers who provide flexible payment options experience an increase in customer orders of 60-75% on average.3 BNPL also results in more repeat customers: two-thirds of buyers typically come back to websites offering BNPL to spend again within a year.
4. Peace of mind on payments
When implemented with the right partners, B2B BNPL can enable merchants to offer payment terms online without worrying about whether they will receive payment – or when.
To meet the needs of businesses, Allianz Trade’s solution can help e-merchants leverage BNPL in several ways, depending on the size of the business and whether it wants to receive payment right away:
• A multinational company can seamlessly integrate a BNPL capability into its online checkout process that automatically assesses the creditworthiness of a customer in real-time before offering them payment terms. When the transaction is complete, an Allianz Trade financial services partner automatically pays the e-merchant the total transaction value, with Allianz Trade covering any potential non-payment – no matter the international location of the customer. Allianz Trade recently partnered with Two, a pioneer in B2B BNPL platforms, and Santander Corporate & Investment Banking to launch the first global B2B BNPL solution for large multinational corporates.
• For small and mid-sized businesses, the processing and automatic payment can be handled directly by Allianz Trade’s BNPL platform provider. The business receives an upfront payment and Allianz Trade handles creditworthiness checks and covers the credit period for the platform provider.
• Alternatively, you can simply set up a direct integration between your website and the Allianz Trade BNPL service and start providing customers’ credit terms, such as net 30 days, with the credit period – and your guarantee of payment – protected by Allianz Trade insurance.
In all cases, with our E-Commerce Credit Insurance, you can rest assured that you typically should be paid in full. That means your cash flow is safer and more predictable, and you can plan for tomorrow with greater confidence – and the prospect of BNPL-boosted revenues.
1. B2B cart abandonment, Biller
2. Fixing online B2B trade, Two
3. What is BNPL for B2B?, Two