The B2B BNPL ecosystem continues to grow as more players, including banks, enter the market

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Whilst the B2B BNPL sector is still in its infancy, the market is evolving rapidly as the ecosystem continues to grow at a significant pace. In 2022, a growing amount of venture capital and private equity funds entered into the B2B side of the buy now pay later (BNPL) industry. Seen as a lucrative growth opportunity, amid the heightened inflation that has put pressure on small and medium-sized enterprises, many new players, including banking institutions are foraying into the B2B BNPL market.

• In January 2023, Santander CIB, Allianz Trade, and Two entered into a strategic collaboration to develop a B2B BNPL product targeted towards large multinational corporates. While Two is taking care of the payment technology, Santander CIB is financing payments to sellers and credit to buyers. Allianz Trade, on the other hand, is offering protection against non-payment risk.

The partnership between the three business entities comes at the time when Two and Allianz Trade partnered earlier in 2023 to provide small and medium-sized enterprises with financing solutions in the United Kingdom. On the other hand, Allianz Trade and Santander were exploring opportunities to fund large projects. To facilitate large B2B sales, these business entities have entered into a single collaboration to offer instant payment technologies to corporates.

In 2023, the B2B BNPL sector is projected to expand rapidly due to the current economic challenges faced by small and medium-sized enterprises. Consequently, providers have continued to raise growth rounds to expand their services.

• Tranch, for instance, announced that the firm had raised US$100 million in a Seed funding round in January 2023. The capital round was led by Soma Capital and FoundersX. The firm is planning to use the fresh capital for bringing its B2B BNPL solution to more software-as-a-service sellers. Additionally, Tranch is also seeking to grow its team in the United States and expand into other business verticals. 
• In January 2023, Mondu, another B2B BNPL provider, announced that the firm had raised US$13 million in an extended Series A round. Notably, the firm raised US$43 million as part of its Series A round in 2022. The extended Series A round, led by Valar Ventures, means that the firm had raised a total of approximately US$90, since its inception.

Like Tranch, Mondu is also planning to use the capital round for driving its market growth, while also funding the development of new products. The B2B BNPL market is also gaining strong growth momentum in the Asia Pacific region, where firms are attracting venture capital and private equity dollars.

• Singapore-based actyv.ai scored US$12 million in its pre-Series A funding round in January 2023. The capital round backed by 1Digi Ventures will be used for exploring global expansion opportunities. The US$12 million round also includes the US$5 million funding that actyv.ai raised from 1Digi Ventures in 2022. During the 12 months in 2022, the firm recorded strong growth, while its BNPL throughput exceeded US$100 million.

Amid the growing shift and focus on the B2B space and to capitalize on the high growth potential of the B2B BNPL market, firms are also entering into strategic collaborations and partnerships in the global market. actyv.ai, for instance, entered into a strategic collaboration with RATNAAFIN, an India-based NBFC firm. The strategic alliance is part of the firm’s strategy to facilitate embedded B2B BNPL offerings for micro, small, and medium enterprises. Similar trends have been observed in the European market, where the B2B BNPL sector has gained widespread popularity. 

• In January 2023, Hokodo, the B2B BNPL provider, announced that the firm had entered into a strategic alliance with Lemonway to help B2B marketplaces offer trade credit online in Europe. While Hokodo will evaluate the buying power of businesses in real-time, Lemonway will assist with payments and help platforms with regulations and compliance.

With many industries catching the trend of the B2B marketplace, there is a lucrative growth opportunity for financial institutions by offering seamless and quick payment solutions to businesses. In 2023, many more financial institutions, including innovative startups and incumbents, are expected to tap into the massive growth area of B2B BNPL. Consequently, the B2B BNPL ecosystem is expected to expand further and record strong growth over the next 12 months in the global market.

To know more and gain a deeper understanding of the global BNPL market, click here.