This piece at The Fintech Times is penned by a VP at Fintex Capital, a UK-based investment firm that specializes in alternative credit. The point of the posting is to generate interest in the idea of further expanding the BNPL (Buy Now, Pay Later) model into the B2B space. Most readers have been seeing a number of articles and other research around the BNPL topic, a model that has somewhat exploded over the course of the past couple of years, even though installment loans have been around forever. However, there are some new factors that the author explains (and expands upon in the posting) have impacted BNPL and make it poised to expand in the B2B space, particularly among SMEs.
‘B2B credit is not, in itself, a new concept – through invoice financing, most businesses can already pay for an item or service at a later date. What has changed, however, is the technological, financial and social context within which modern day businesses are operating, and it is this transformation – and three key factors, in particular – that has led to the rise of B2B BNPL…
The first factor is the maturing of financial technologies that makes B2B BNPL possible… The second factor is the proven B2C model, which has given businesses and B2B credit providers confidence that the model can work… The third and final factor that has accelerated the development of B2B BNPL has been the economic impact of the pandemic.’
So, we will undoubtedly be seeing more BNPL solutions targeted at the B2B space, especially as one views the rapidly expanding role that e-commerce will play over the next 5 years. The trend in that space now is to ease the payments acceptance experience, providing more flexible use of all payment tools in local currency (a nod to the cross-border aspect). Expanding that into the ease and speed of credit access for B2B buyers is a logical step. The author recognizes the importance of responsible lending, of course. We expect lots more to be written on the topic. Worth the couple of minutes to read through.
‘With BNPL having revolutionised consumer finance in recent years, business finance is now set to undertake a similar transformation. Thanks to fintech innovation, the potential for BNPL finance to unlock growth and scalability is now vast. It will be up to all of us – tech innovators, financers, lenders and customers – to ensure that this lending power is deployed responsibly.’
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group