B2B Payments

Self-Serve Checkout: the B2B E-Commerce Game Changer

Team Balance
July 27, 2023
Table of contents

Consumer spending online is quickly gaining a significant share of total retail sales. E-commerce grew from 15% to 21% year-on-year in 2020; according to Digital Commerce 360, “Consumers spent $861.12 billion online with U.S. merchants in 2020...That’s the highest annual U.S. e-commerce growth in at least two decades.” The easy answer is, the Pandemic-that-shall-not-be-named drove everyone online. But there’s another factor that has to do with how easy it’s become to buy anything online as a consumer.

While the pandemic sent consumer e-commerce spending soaring, it was able to do so because the right conditions were in place for this unprecedented growth. Logistics and shipping, for example, are so advanced these days, that getting an order to your doorstep is easier and faster than ever before. The B2C online payment experience is incredible, too. But it wasn’t always!  

Does anyone even remember how many form fields had to be filled out before one-click checkout, swipe-to-pay and Face ID? 

The self-serve checkout craze began in 1999, when Amazon patented '1-click' checkout technology (and trademarked it). When the patent expired in 2017, it became possible for other companies to follow suit. Amazon benefitted from their innovation; according to Insider magazine, “Removing this friction in the checkout process is often highlighted by experts as one of Amazon’s biggest advantages in the online retail space.” Would Amazon have become what it is without this competitive edge?

Screenshot from Amazon's patent for 1-click checkout with the US Patent Office, filed in 1999
Part of Amazon's patent filing for 1-click checkout in 1999

B2C e-commerce is huge, and implementing a streamlined checkout experience played a large part in enabling it to grow so well. Now, let’s consider B2B e-commerce. If you stop to think about it, all of B2C e-commerce is made possible by a chain of businesses paying each other all the way down the supply chain to the hands of the retail consumer. What about those transactions? 

As Danny Crichton wrote in TechCrunch, “You head over to B2B payments … and you recoil in horror as you migrate away from a utopian future of promise to the ruins of an antiquated past.” There hasn’t been anything even close to self-serve checkout experiences for business transactions. Why not? 

The golden age of B2B e-commerce...are we there yet?

B2B e-commerce was worth $21 trillion globally in 2018. That’s according to the UN’s trade and development body, UNCTAD. Here’s the crazy part. All those online transactions are only 10% of all B2B transactions ($218 trillion globally in 2018), so a lot of businesses have a lot to gain by moving payments online. Can a streamlined B2B checkout experience be the difference between companies who seize this opportunity and those who miss out?

10% of business payments take place online and 90% are still offline

In recent years, there have been many companies nudging B2B payments online - using credit cards. And credit cards provide a good solution for part of B2B transactions, apparently, for up to 10% of them. As much as we love cards for their self-serve, smooth experience…. they’re super expensive, and it’s not how businesses are used to paying. We can’t rely on credit cards to usher in the golden era of 100% business payments being fully online. 

As we wrote recently, many of today’s payment solutions used in B2B were really created for a B2C context, while few have been purpose-built for business buyers’ nuanced needs. And that just isn’t good enough.

Here’s why copying B2C is not enough for B2B payments

Here are the two main reasons why B2C checkout can’t just be copy-and-pasted into a B2B context.

  1. Payment mechanisms and terms - can buyers choose to pay upon delivery? In milestones? In installments? Can they be approved for transaction financing, like net-30, net-60, etc? 
  1. Payment methods - we talked about credit cards, but what about ACH? Wire transfers? Paper checks? ACH? How does that affect when the seller is paid out? And think about the sellers offering terms, like net-30, that wait 30 days for the payment to get issued, and then have to wait another 2 weeks to cash the paper check? 

We’ve got some fresh insights into the pain of B2B transactions, courtesy of the hundreds of customer conversations our team has had in the last few months. 

  1. For B2B marketplaces selling goods online, payment infrastructure is expensive and complicated to set up. Not only do they have to facilitate payments from buyers (accepting multiple payment methods and terms), but they also have to facilitate vendor (seller) payouts. Staying competitive in terms of keeping sellers on the marketplace platform means shortening the time it takes for a vendor to get paid by the platform, or payout lag time. It also means finding ways to offer transaction financing, or payment terms, to as many buyers as possible to increase loyalty and facilitate trade.

  2. For merchants selling goods directly to customers on their own websites, payment infrastructure is troublesome, too. Financing is a major pain point - doing it in house carries a lot of overhead and risk, while bringing on a third-party financing solution means sending buyers off the merchant’s website in order to get approved for terms (and not every part of this is always streamlined online even with dedicated financing 3rd parties). Not offering financing is simply not acceptable. ACH payments are another pain point - most solutions won’t provide adequate coverage for bank payments, managing non-sufficient fund risk is hard, and waiting for funds to arrive for several days is a burden on cash flow.

Self-serve business checkout will change B2B e-commerce

Reducing friction in B2B transactions will remove the huge bottleneck for merchants, marketplaces, service providers, SaaS companies, and pretty much any other business. The gold standard for friction-less interactions is self-serve, and it’s already happening. According to a McKinsey report, most B2B seller interactions have moved to remote or digital in the last year. 

Most B2B seller interactions have moved to remote or digital, and that's exactly what customers want.
Source: McKinsey

Up to 80% of surveyed B2B decision makers prefer remote human interaction or digital self-service, and it’s one more jump to complete the ‘digital transformation’ circle started in the late 90’s. 

At Balance, we’ve created the first B2B Checkout built for businesses. It’s the first solution that started from scratch to address the entire spectrum of problems and pains faced by businesses accepting B2B payments.

For B2B payment methods, we’ve gone beyond the self-serve credit card offering that’s so common today and made it possible for buyers to breeze through self-serve checkout using all of their favorite old-school payment methods. For B2B payment mechanisms, we’ve taken away the downsides of offering transaction financing and flexible options to pay later, as we approve buyers for terms directly from the checkout, and pay the sellers right away. Best of all, we’ve made it all extremely easy to start using. Companies with their own website or marketplaces can use our code snippet to get a hosted checkout, completely white labelled to their online property. 

By digitizing B2B payments, we hope to speed up the consumerization of business transactions. As soon as business sellers can be offered the right payment methods and mechanisms, along with a smooth user experience, B2B e-commerce will take off, just like its B2C counterpart. 

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