The volume of Business to Business (B2B) payments globally is four times higher than consumer payments. Until recently, B2B attracted little attention from investors and the media – but now B2B marketplaces are springing up across Asia, Latin America and Africa, with Europe and North America already starting to follow. In the first of a two-part series, we spoke to Masha Cilliers, an Independent NED and Advisor to the payments industry, to better understand the rise of B2B marketplaces – and the implications for banks and payment service providers.
Masha Cilliers (MC): There are a lot of reasons why B2B marketplaces are growing fast – but first, it’s worth understanding the scale of the opportunity. We are talking about a total addressable market that could be three times the size of consumer marketplaces like Amazon, Etsy and eBay.
There are three key reasons why these marketplaces have come to prominence. The first is that, since the creation of the internet, businesses have by and large been slow to take full advantage of the opportunities it offers to cut procurement and sourcing costs. For instance, almost all businesses now procure and source over the internet, but many still do so on the basis of a “one to one” transaction and relationship – i.e. directly with their supplier – rather than seeking out the best deals in the way consumers do via Amazon and other marketplaces.
Another reason is that the experience which every manager enjoys as a consumer has come to influence work purchasing habits. We are seeing more corporations starting to expect the same choice, speed, cost savings and convenience consumer marketplaces offer in their corporate procurement activity. From the seller side, marketplaces are attractive because they offer manufacturers the opportunity to get paid faster, to lessen administrative burden, to improve sales volumes and to access previously unaddressed segments of B2B customers.
Finally, it’s worth noting that in a lot of segments – as diverse as oil drilling equipment and dentistry – B2B marketplaces are developing from a previous wave of internet procurement platforms and ‘yellow pages’-like directories whereby buyers and sellers would be introduced to each other on a platform but would not be able to complete the actual purchase there, having to transact directly with each other via traditional and slow methods including purchase orders, invoices and bank transfers. So, as businesses expect more from these intermediaries, they are now either evolving into B2B marketplace-like platforms, or being replaced by them.
MC: We do see platforms emerging in sectors as diverse as heavy machinery and end consumer products. Typically, marketplaces are rising where there is a high degree of time or cost involved in traditional procurement exercises – for instance, lengthy request for quote (RFQ) exercises, complicated vendor onboarding and verification processes and the like. Marketplaces can eliminate or significantly speed up some of the steps required by onboarding, verifying and vetting vendors and buyers, providing payment infrastructure, standardising customer support, allowing real-time inventory visibility to the buyers, providing necessary online documentation, such as invoices and statements and even integrating delivery confirmation feed.
To give an example, I have been advising on a project which launched a marketplace in the maritime equipment sector. The marketplace was built by an existing procurement platform in that sector, the key aim and the result of which was to speed up payment and settlement for suppliers, and to make the procurement of goods faster and cheaper from both a time and cost point of view for purchasers.
MC: On the opportunity side, some of these marketplaces are looking to partner with external payment providers to include payments into the procurement flow, which would previously be executed offline between the buyer and seller using the traditional invoice payment process. The reason for such partners is that the provider of this payment facilitation needs to be licensed and will typically be expected to to hold funds, then release them to the seller’s account on receipt of goods buyer – an important distinction from the B2C market, and one that’s entirely understandable given the high value of some B2B transactions. This, generally, is outside of the scope of what the platforms are prepared to offer themselves, as preparing for and obtaining the necessary licences can be a very lengthy process plus leveraging established payment partners adds security and trust to the interactions with the suppliers and the buyers.
As the B2B ‘platformification’ evolves, we can expect to see downward pressure on bank transfer fees and, as many B2B payments are cross-border there often is the need for foreign exchange, on the FX fees. The corporate banks, who were the primary payment facilitators for B2B sector, have long been applying hefty FX fees, often at around 1.5-2% of the transaction value, but the more innovative newly established remittance and e-money providers are actively engaging with this sector now and are reducing these fees significantly to around 0.5% of transaction value. They also offer various ways of helping to manage the fund flows, ledger management and reconciliation with products such as virtual IBANS and sub-account structure which, in turn, helps to improve and speed up settlement times.
This leads us to consider the roles that the traditional banks play in B2B transactions, especially those via platforms. There is an undeniable risk to their established revenues from the FX and other fee reductions but there are also new opportunities. Many established banks are already partnering with the emerging fintech payment companies and provide the actual banking rails and the accounts to these institutions. In some cases, the banks are also distributing the innovators’ technology to their corporate clients to ensure that the clients get the best of both worlds – the latest payment options, plus the confidence that an account at a large corporate bank provides. Thus, with the emergence of new ways of doing B2B ecommerce there are new opportunities for everyone in the financial services industry to develop great payment journeys that will help these platforms to succeed.
In the second part of this series, we will look at opportunities for banks in B2B marketplaces – and the challenges B2B marketplaces face as they grow. Masha Cilliers will be presenting at MPE Europe in March 2026.
Share this
