B2B Payments: perspective and analysis

I always find it interesting when industry trends take on a life of their own. There is, always, the constant ebb-and-flow of focus on differing areas of technology and business models. But some seem to resurface more than others. In these discussions, and trends, business opportunity can be found. If more than one person is discussing it, over a period of time, there is something substantive to the discussion.

For instance, the electronification* of B2B payments.

Glenbrook has, as of late, released some incredibly compelling briefs on research they have performed. In a fashion similar to my last post**, I encourage you to download the entirety of their research entitled Card Acceptance for B2B Payments: Qualitative Research Findings, Carol Coye Benson and Erin McCune detail the results of a survey performed surrounding B2B interaction and the payment methods businesses accept.

The most compelling portion of the research, however, is that the survey focused not only on acceptance methodology but also on the reasons business gave for electronification and tender preference. The details of the questions asked and the methodology are presented in greater detail in the research brief and the blog post…

A few, key, points listed on the Payments Views blog are:

  • Businesses are polarized when it comes to accepting card payments.
  • Business-to-business suppliers of all sizes are relatively unaware of PCI compliance.

These results are as I expected. As I engage with software companies, service providers, and channels in the B2B space their is always a discussion of the need to provide ROI analysis to the business when discussing B2B (or B2C for that matter). Particularly when that discussion is focused on the payment enablement of back-office functions.

So, how is such a solution positioned?

The easiest is to locate those businesses that are already motivated, or interested, in accepting card payments.

Following that, compelling cases regarding cost/benefit need to be put together. This is particularly important for the SMB community that, in my experience confirmed by the Glenbrook analysis, is the most polarized of segments regarding electronification. There has to be benefit…

And, importantly, that benefit has to be tied to the workflow that the SMB utilizes to invoice their customers. Simply offering a website to accept payment on invoice isn’t sufficient…the invoice creation, payment enablement, and remittance must be integrated into the application to truly drive adoption.

One final note, there is a quote by an SMB in the survey that I find particularly compelling.

We have not had people ask us if they can pay with cards.

I have made the contention, argument, observation, what have you, in the past that the decision on SMB tender acceptance is driven by customer request. That the point of considering what modalities should be accepted for their business is at the time of presentment of a new modality or a request for acceptance of a new tender.

My data is empirical, in the sense that it relies on observation…but I have not performed substantive experiment to validate the result. As such, it does my heart good to see a bit of additional external validation.

What’s your perspective? Agree? Disagree? Anything to add? Critiques? The comment form is below…

* Not quite certain if that is a word, but I like using it anyway.
** i.e. I’m leaving out some level of detail to ensure the proliferation of their proprietary work

June 30, 2009

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