Buy now, pay later (BNPL) has changed the retail industry by allowing customers to buy whatever they want and pay for it over time. The buy now, pay later (BNPL) business has flourished in recent years, supporting and expediting the shift in consumer payments through point-of-sale financing with an estimated $100 billion in annual activity. It is an idea that may appear innovative, but it's a development of something that consumer and business-to-business (B2B) businesses have been offering customers. The main distinction is that with BNPL, users do not need to pay an additional charge as long as they're making their timely payments.

‘Buy now, pay later’ (BNPL) is a new phrase for purchasing on account, which signifies that anything is purchased and payment is received later. The payment mechanism is already well-represented and widely used in the B2C market. It includes:-
•    Adaptable credit line
•    Instalment payments 
•    Purchase on credit
•    Subscription model

Over the last 15 years, the commercial world has dramatically altered. However, when it comes to the corporate sector, B2B remittances are still stuck in the 1990s.

BNPL in the B2B Sector is Gaining Popularity

BNPL in the B2B sector is gaining popularity due to the valuable offerings it provides for MSMEs. In the BNPL model, the buyer is allowed to pay for the purchases in installments over some time. While the seller gets a full payment from the financier on behalf of the buyer. This leads to the improvement of a seller's conversion rates and sales. With the delay of even a day in the billing cycle leading to higher costs, the BNPL model presents a win for all by providing inclusive credit services to MSMEs that have been underserved for quite some time. 

With the smaller enterprises also undergoing a digital transformation in India, B2B commerce will reach $1.1 trillion by 2024. B2B commerce platforms have come into the spotlight and are looked at as major influencers in the interaction of small businesses with their supply chain. 

Over 93 percent of MSMEs in India do not have access to formal sources of credit, which results in them seeking credit from unregulated lenders at high-interest rates to meet their operational costs. MSMEs need the flexibility that Buy Now, Pay Later offers. Economic slowdown due to the pandemic and resulting inflation has forced small businesses to focus on economic solutions. Small enterprises have toiled to increase cost-effectiveness to manage operational costs. An MSME's need for working capital and easy cash flow is quite unpredictable. In this case, BNPL ensures that small businesses have a flexible repayment schedule to maintain financial health and avoid liquidity constraints. 

What is Embedded Finance? How is BNPL Actuated by Embedded Finance? 

Embedded Finance is the integration of financial services with traditionally non-financial services. For example, a customer can make cashless payments with the press of a button on a food ordering app like Swiggy or Zomato. 

Seamless payment experiences are one of the basic expectations of any customer who wishes to use digital modes of payment for any kind of purchase. This is especially true with MSMEs. The huge demand for credit for a shorter period and the difficulty in obtaining the same is faced by small businesses around the globe. BNPL empowers small businesses to grow and manage their working capital gaps. Due to the use of embedded finance that B2B credit offers are available for customers on various online platforms. It is now the fastest-growing payment option and is in the process of becoming a standard. MSMEs must leverage embedded finance to adopt BNPL and reap its rewards.

Merits of BNPL in B2B E-commerce

In B2B e-commerce, BNPL provides significantly larger shopping carts and increased conversion. As a result, scaling sales is rather simple. Lifetime value rises greatly as well. It is evident that ‘buy now, pay later’ for company clients can result in long-term growth on both sides. After all, this service allows clients to increase their product line in response to customer needs. It is thus feasible to respond to the market's fast-changing needs - and not just during annual holidays!

Other advantages of the procedure include seamless checkout experiences. They, too, enhance the customer experience in addition to raising the average order value and are also inexpensive to automate. The checkout methods are simple to incorporate into existing systems. Even in the case of high-value transactions, this minimizes the rate of order abandonment. B2B organizations can also build secure transactions with large data sets. The absence of media interruptions during checkout is equally significant for retailers as it is for traders. BNPL will account for about 3 percent of the world's total e-commerce spending by 2023 says a study by The Payers. 

BNPL's Impact on the B2B Sector Globally

‘Buy Now, Pay Later’ is becoming increasingly popular globally. It's also worth including it in your payment mix if you want to enhance sales and customer loyalty. The advantages for your customers are self-evident: Your corporate clients benefit from flexible liquidity as a foundation for their entrepreneurial success. They can quickly order the things they require from you, with the transaction being tracked on the dashboard at all times. This simplifies bookkeeping and provides long-term pleasure at all levels of the organization. 

As a result, BNPL for marketplaces provides compelling benefits to you as a merchant or dealer. Increased client loyalty, however, is simply one of the benefits. It is also necessary to emphasize the increased security in payment operations. Secure payment options, such as those used by Billie, protect you from potential payment failures. As a result, planned security is completely operational. 

Simultaneously, suggested ‘Buy Now, Pay Later’ solutions can be employed as a whole service. Thus, dunning and collection are always a part of it. Once again, BNPL brings together what belongs together. It keeps its finger on the pulse of the B2B payment. BNPL applications have seen an increase of 162 percent in customer acquisition between 2017 to 2019. After all, digitization is fundamentally altering day-to-day business; payment options must be equally adaptable. 

To conclude, BNPL in B2B has leveled the playing field for businesses that were previously neglected and deprived of access to essential resources like regulated credit lines and working capital. This has subsequently led to the improving the sustainability of MSMEs and eased the transaction-based operation of the businesses. The risks faced by smaller businesses or entrepreneurs have been alleviated significantly by utilizing alternate data in place of the traditional to evaluate credit criteria. 

Credit growth to micro and small industries accelerated to 19.9 percent to Rs 4.84 lakh crore, from 3.1 percent, according to the Reserve Bank of India. This has had a positive effect on businesses that are a part of the MSME segment. It is vital to offer a variety of payment options and give consumers many choices. Incorporating the ‘Buy Now, Pay Later’ option can help you increase sales, reduce cart abandonment, and build trust. Offering the BNPL option allows you to differentiate yourself and differentiate yourself from your competitors.