B2B Payments set for disruption in rising markets

In recent years, digital transformation has deeply reshaped rising markets such as Latin America, Africa and India, granting individuals seamless access to financial services and digital transactions. However, while consumer payments have embraced digitization, businesses in rising markets predominantly rely on cumbersome, time-consuming, and non-digital payment methods, presenting a significant challenge – and opportunity – in rising economies.?

Compared to B2C transactions, the typical B2B transaction involves a back-and-forth process that depends on up to six intermediaries and takes 14 days to pay a single invoice (a B2C payment can take from seconds to a day or two, at maximum), leading to low visibility and high costs. This pain point is shared by small, large, and enterprise companies, and is particularly frustrating for international transactions.?

But, as businesses increasingly embrace digital channels, a latent demand for digital payment solutions that remains unmet emerges. As Lindsay Lehr, Managing Director at PCMI (Payments and Commerce Market Intelligence), told for EBANX's Beyond Borders study , B2B is a market just beginning its digital journey.

According to estimates from the Capgemini Research Institute, the B2B digital payments market is poised for an annual expansion of 11% until 2027, with rising markets like Latin America, Asia, and Africa projected to capture 40% of the global volume by the same year.?

The catalyst for this surge in demand for digital B2B payments lies in businesses' increasing reliance on online software licenses, cloud services, and digital finance. Around half of businesses worldwide make online purchases, compared to only 23% who sell online. Most companies today are also connected to the internet (97%), have a website (78%), are on social media (63%), or use cloud computing services (45%), per OECD numbers.

As Beyond Borders study shows , international trade further accentuates the demand for digital B2B payments, since a significant portion of companies from rising markets rely on foreign suppliers and technology. A World Bank survey shows that nearly 70% of firms in Latin America and 60% in Sub-Saharan Africa import a range of products, including food, and approximately 15% have technology licensed from foreign companies.

In 2022, the import trade volume in Africa, Latin America and India reached USD 3.7 trillion, a 10-year record, according to UNCTAD.?

There is yet another trend accelerating the digitization of the day-to-day B2B financial flow: the emergence of B2B marketplaces. These platforms, acting as intermediaries between buyers and sellers, have impacted several industries, facilitating transactions across retail, construction, manufacturing, agriculture, among others. In regions like India, Southeast Asia, and Africa, B2B marketplaces are thriving by offering tailored solutions to businesses of all sizes.

Companies are going digital, cross-border trade is on the rise, and new business models are changing the way companies connect with suppliers and buy online – despite all of this, most transactions still rely on manual processes and traditional bank transfers, hindering efficiency and agility. Those who currently use EBANX as a B2B payment partner have stated that the main pain points of their past operations were the lack of local payment options, in addition to the time-consuming processes for charging and invoicing customers.

Among SMBs, these limitations are even more distressing. Many small businesses need multiple relationships to support their cross-border payment needs, having accounts with several banks and payment service providers (PSPs). Documentation requests for compliance and regulatory purposes are overwhelming, especially considering their lean structure, and integrating with multiple PSPs is time-consuming and, most of the time, impractical due to a lack of resources and expertise.

To address these pain points, there is a growing emphasis on offering local digital payment options tailored to the needs of businesses in rising markets, such as instant transfers, digital wallets, cash vouchers, mobile money, and local cards.?

By leveraging local payment methods and intuitive solutions, businesses can streamline their B2B transactions, enhance efficiency, and unlock new revenue streams. In addition, they also deliver their business customers a valuable asset: being able to choose how to pay.?

"We need to give more instruments for businesses to pay: if you offer Pix in Brazil or bank transfer in Nigeria, for example, everybody will know how to do this, because these are the most used payment methods in these countries," says Sebastian Fantini, Product Director at EBANX. "In other words, we need to level up the offering of digital payments in the B2B flow."

Ultimately, the digitization of B2B payments holds immense business potential in rising economies, offering a pathway to increased efficiency, reduced costs, and greater scalability. By embracing digital payment solutions and offering localized payment options, businesses can navigate the complexities of cross-border transactions and unlock new growth opportunities in the evolving global marketplace.?

You can find much more data and graphs by accessing our Beyond Borders study here (it is for free!).

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