The rising demand for flexible B2B payments will aid the growth of the BNPL industry in 2023

The rising demand for flexible B2B payments will aid the growth of the BNPL industry in 2023

The rising demand for flexible B2B payments will aid the growth of the BNPL industry in 2023

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The buy now pay later (BNPL) concept has been primarily centered on the business-to-consumer sector. During the pandemic outbreak, the payment method exploded in terms of consumer adoption. Low-cost financing and higher purchasing power were among the factors that drove the demand for BNPL schemes globally. In 2023, the payment solution is slated to gain increasing traction in the business-to-business segment as well.

Many new players are entering the market to serve the growing demand for flexible payments among businesses. The trend is especially strong in the European region, where the B2B BNPL segment picked up pace in 2022 and is further continuing in 2023.

  • In March 2023, Hokodo, the United Kingdom-based fintech firm, announced that the firm had entered into a strategic collaboration with BNP Paribas, the French banking group. Under the collaboration, the two firms are launching a new B2B BNPL payment solution, which has been specifically built for large corporates. The new offering, which can be integrated into the existing checkouts through APIs, will enable corporates to provide BNPL services to their business customers.

The collaboration between Hokodo and BNP Paribas comes two months after the alliances between Hokodo and Lemonway. The alliance between Hokodo and Lemonway was aimed at helping B2B marketplaces in Europe to offer B2B BNPL online.

On the other hand, the foray of BNP Paribas into the B2B BNPL space comes after Santander also launched a B2B BNPL offering for large corporates in collaboration with Two and Allianz in January 2023. These collaborations and the subsequent entry of banking giants into the B2B BNPL space are driving the competitive landscape in the European market.

Along with strategic partnerships, venture capital and private equity funding are also flowing at an accelerated pace in the European B2B BNPL sector. Mondu, for instance, announced that the firm had raised an additional US$13 million as part of its Series A round in January 2023. Europe-based B2B BNPL providers have been also raising capital rounds to expand their global presence.

  • In January 2023, Tranch, the United Kingdom-based B2B BNPL provider, announced that the firm had raised £81 million or US$100 million to expand its presence in the United States market. The funding round was led by Soma Capital and FoundersX. Clear Haven Capital Management also participated in the funding round. 

The flurry of activities in the European B2B BNPL space, including strategic alliances and funding rounds, indicates that the sector is poised to record strong growth from the short to medium-term perspective.

The trend of strategic alliances is also gaining strong momentum in other regions of the world, including in Asia Pacific and North America, as firms are seeking to capitalize on the growing demand for flexible B2B payments.

  • In March 2023, actyv.ai, a Singapore-headquartered B2B BNPL provider, announced that the firm had entered into a strategic alliance with IIFL Finance. Under the collaboration, IIFL Finance will offer bit-sized BNPL loans to businesses on the actyv.ai platform.
  • In North America, Tabit and Lenovo entered into a strategic partnership to offer B2B BNPL services in Canada. The collaboration will enable Tabit to integrate its BNPL services into Lenovo's offerings, thereby allowing the latter's business customers to access flexible payment solutions at the point of sale.

PayNXT360 expects more such strategic collaborations to emerge in the B2B BNPL space outside Europe from the short to medium-term perspective. The demand for working capital amid the current macroeconomic environment, coupled with the need for flexible payment solutions among businesses, will keep aiding the B2B BNPL sector growth in the global market. Consequently, PayNXT360 also expects more players, including banking institutions, to mark their foray into the fast-growing sector in 2023.

Amid growing regulatory scrutiny, reduced consumer spending, and a high-interest rate environment, the B2C BNPL sector is struggling to maintain the growth rate it achieved during the pandemic period. Consequently, in 2023, PayNXT360 expects the B2B BNPL market to drive the next growth phase for the global BNPL market. 

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

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