Mapping the B2B Payments Tech ecosystem
On the road to consumerization
Writing about the ‘digital shift’ of payments in 2021 might seem like a laggard move. Still, when it comes to B2B payments, paper and offline remain the standard — after all, 60% of B2B payments are still made with paper check in North America. Indeed, most of the category-leading companies in the payments space are consumer-focused while the penetration of electronic invoicing and payments has remained limited in the business side of commerce.
With my colleagues Elise Stern and Clement Vouillon, we’ve been following the B2B payments ecosystem for quite some time and we’ve been excited to see clear signs of momentum in the past few months 🚀🚀🚀.
We’ve actually been lucky enough to witness this acceleration first-hand as Tink, Ppro, Payfit, Jenji and Swile in our portfolio have experienced exceptional traction over the past few months.
After speaking with dozens of entrepreneurs in the space, we’re once more convinced that the biggest opportunities are yet to come. Hence, we decided to gather our thoughts on the opportunity in a few slides and videos.
// You can find the full presentation HERE //
It will cover the following elements:
- A market perspective
- A mapping of key players
- Underlying trends in the ecosystem
- Key strategies of winning players
// Videos are available below //
- Why are new B2B payment Fintech companies emerging?
- The B2B payment funnel
- “All-in-one” B2B payment startups
- “Laser focus” B2B payment startups
If you’re working on something in the space, please do get in touch, we’d be very happy to chat (cgiard@eurazeo.com & estern@eurazeo.com ) !
10 Key Takeaways
1. The B2B payments market is far bigger than the B2C and will generate numerous multi-billion dollar companies in the coming decade
B2B payments total c.$120 trillion and are expected to reach 5x B2C payments volume by 2028 — Credit Suisse, Goldman Sachs
2. B2B payments lag years behind B2C in their digitization and are still vastly paper-based (paper invoices, checks)
60% of B2B payments are made with paper check in North America — Goldman Sachs
3. Market shows clear signs of digital shift momentum driven by structural tailwinds (Open banking, e-invoicing regulation, instant payment infra, rise of software adoption and B2B marketplaces)
4. Covid acted as a booster for electronic payments adoption
40% of CFOs are planning to accelerate automation and new processes post COVID 19 — PwC
5. Beyond time efficiency and cost reduction, digitization has the potential to transform payments from a cost center to a revenue generator (discounts, embedded finance) and a cornerstone of data-driven business strategy
6. Players are expanding horizontally along the payment value chain by progressively integrating end-to-end capabilities: procure-to-pay, order-to-cash and multiple payments offerings. Value proposition shifts from pure automation to visibility and cash management
7. The complexity of B2B payments workflows and the depth of the market leave room for verticalized solutions tackling specific customer subsegments
8. Players should aim at multiplying and streamlining integrations with other financial & operational platforms (ERP, accounting software) to unlock full automation potential and adoption
9. Ability to leverage indirect distribution channels (bank, accountants, accounting software) is instrumental in the go-to-market. The proliferation of white-labeled solutions echoes this necessity
Melio’s partnership with QuickBooks has been instrumental in their US deployment
