Today, consumers demand a convenient and hassle-free checkout experience, whether online or in-store.
In Europe, that means that physical retailers need to offer whichever contactless payment methods are popular in their local market, either NFC or QR code based. For online stores, there are even more options to consider, with the bar now set at a seamless one-click checkout that supports multiple digital wallets and buy now, pay later (BNPL) options.
Yet in the parallel world of business-to-business (B2B) payments, the same high standards for speed and variety are not nearly as widespread. It doesn’t mean, however, that there isn’t a demand for better solutions, Vincent Choi, CEO of Pomelo Pay, told PYMNTS in a recent interview.
Some of those solutions are what the U.K.-based startup, founded in 2017, is looking to provide businesses, enabling them to accept digital payments quickly and at low cost without having to invest in expensive point-of-sale hardware.
According to Choi, they are also committed to helping companies maintain sufficient working capital by connecting businesses to lenders, as invoices can sometimes take months to be paid, depending on the industry, leaving businesses with high out-of-pocket costs.
Overall, the advances in digital payments at the consumer level have led to B2B businesses “now demanding B2C-type FinTech in B2B,” Choi said, adding that those businesses “are replicating what they will do in their personal capacity and how their consumers are interacting with them and now they want to replicate that in the business world.”
More on this: Embedded Finance Brings Consumer Convenience to B2B Payments
Another driver of change in the digital payments ecosystem, according to Choi, is the growing online presence of smaller businesses. He said that although digital payments have enjoyed a strong period of growth in the last decade, that was initially fueled by larger businesses that had more expertise in the field.
Read more: 23% of SMBs Want All-in-One Solution to Make Business Payments
“Now that a lot of the smaller businesses are coming online, their demand for [digital payment solutions] is where the trend comes from,” he noted, adding that Pomelo pay has seen growing demand for B2B digital payment from companies of all sizes.
Now, the biggest challenge for digital payments in the next five years will be moving the precedents set by B2C payments “up the supply chain,” he pointed out.
Pushing the Industry Forward
While regulators and payment service providers don’t always see eye to eye, Choi said that U.K. regulators, particularly the Financial Conduct Authority (FCA) are playing a critical role in pushing the industry forward.
For example, despite the mixed reactions from industry players around the U.K. and the EU’s open banking frameworks, his opinion was that regulators “have done their job. It’s [now] up to the players in the market to provide a user experience that really works for the consumer.”
But in the end, regulators must both lead and follow innovation.
Following innovation is particularly noteworthy in the case of crypto and blockchain technology. While legislators led the charge in creating a legal mandate for banks to open up account data to third parties, the field of crypto and blockchain has been the other way around, with regulators playing catch up to the technology, Choi explained.
Regardless, what ultimately matters is that the needs of business customers are met. “At the end of the day, whatever technology that may come through, whether it’s blockchain or crypto, the fundamentals is the businesses need to receive the money faster,” he said.
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