Solving The Card Payment Puzzle In Wholesale Fashion

Though B2B commerce tends to pursue a consumer-like experience for business buyers, the gradual maturation of the landscape has given rise to the recognition that B2B eCommerce cannot, and should not, exactly mirror B2C eCommerce.

The complex requirements of both business buyers and their suppliers have pressed the eCommerce and online marketplace technology arena to elevate its functionality. Those nuances grow even more unique across individual verticals. And while B2B eCommerce technology may have caught up to those needs, B2B payments workflows continue to rely on infrastructure and technology designed for B2C transactions.

Now, that’s beginning to change, too, said Heath Wells, co-founder and co-CEO of fashion wholesale platform NuORDER.

“B2C has been the revolution for the last 15 years, but B2B has finally caught up,” he told PYMNTS in a recent interview. “B2B eCommerce is now the next frontier, so payment technology has said, ‘we’ve gotten through a big backlog of what we needed to accomplish on the B2C side. Now, we’re ready to attack B2B.”

As Wells explained, that progression of B2B commerce and payments opened the door for NuORDER to develop a proprietary payment solution designed specifically for B2B commercial card transactions. He discussed the most prominent payment pain points that retail buyers and brand sellers face as they migrate to digital sales channels, and offered insight into why he believes B2B payments are finally at a digitization tipping point.

Commercial Card Friction

NuORDER formed to streamline the B2B buying and selling experience for the fashion industry, which faces some particular challenges when it comes to trade workflows. Retail buyers, for example, must be able to view brands’ up-to-date inventory, while brands need avenues to suggest products to their buyers.

The tradition of developing seasonal lines of apparel also means brands need to facilitate pre-booking, a way of accepting orders in advance from their retail customers, with products sometimes purchased months before they’re manufactured and shipped. Though NuORDER has solved for these requirements, the act of actually paying for these orders was filled with plenty of friction.

As Wells explained, brands were having to store credit card information in Excel sheets and written notes, then manually key those details into separate processing platforms apart from the NuORDER portal. “They’re saving credit cards in Excel tiles and on Post-It notes, and putting it in folders,” said Wells. “This is bananas.” Not only was this an inefficient workflow, but when retailers purchased items that wouldn’t be shipped for several months, the delay meant those retailers had to call their customers to authorize a card payment, creating an opportunity for those buyers to cancel the order.

For the buyer, though cards are an attractive payment tool thanks to rewards and capital float, having to manually share card details with every single brand similarly created payment headaches.

Payment Technology Catches Up

Though cards make up only about one-fifth of transaction volume on the platform, card payments accounted for the vast majority of payments friction for businesses on NuORDER, according to Wells. That meant solving for this pain point became a priority — but the platform had to wait for payment technology to advance enough to be able to address some of these challenges.

Among the most pressing requirements was a card processing solution to be able to extend authorization periods, allowing for brands to actually charge the card on file when an order is fulfilled and shipped — even if that charge occurred months after a retailer placed the order. The solution also had to enable buyers to keep their card on file and use it across multiple brands in what Wells described as a “communal wallet.”

Those features, combined with NuORDER’s ability to aggregate its buying power and offer lower interchange rates than if a brand were to work independently with a processor, can relieve both buyers and sellers of a significant amount of B2B payments friction.

Embracing Change

NuORDER has plans to introduce integrated B2B payment functionality across other rails moving forward. As a whole, demand for integrated, electronic payments continues to mount in this industry, though Wells acknowledged that for some firms — especially larger players — change isn’t easy.

“The pain of the current way of doing things needs to be greater than the pain of moving,” he said of the challenge of shifting businesses’ payments behavior.

But with education and awareness, Wells said it’s “only a matter of time” before electronic payments become ubiquitous in the B2B arena. As that evolution unfolds, payment technology must continue to evolve to address the unique and complex pain points not only of B2B payments, but also of specific verticals within the B2B segment.

Today, according to Wells, organizations are eager to adopt friction-fighting solutions. Demand for an integrated card processing tool within NuORDER had surged in recent years, he noted — and as more companies embrace the B2B eCommerce model, they will be far less accepting of cost-intensive friction in the B2B payments workflow.

“Businesses shouldn’t be spending money on inefficiencies,” said Wells. “There is not enough margin to do it that way.”