Study: Business Buyers Want PayPal-Like Simplicity and Automation When Paying by Invoice
In a recent study Billie conducted together with leading German business school HHL Leipzig Graduate School of Management, we took a closer look at the enormous potential of B2B e-commerce in general and, in particular, the role that different payment methods play in it. In this report, more than 800 business buyers in German companies were questioned regarding their use of established payment methods, their satisfaction with them along various dimensions, and the potential of alternative payment methods, especially Buy Now, Pay Later (BNPL).
B2B e-commerce, although significantly larger in potential than its B2C counterpart, is still waiting for its big breakthrough. While we've all comfortably been doing our personal shopping online for 20+ years now, in a professional context, we're too often still tied to dusty, analog processes that make business purchasing anything but smooth.
In a recent study Billie conducted together with leading German business school HHL Leipzig Graduate School of Management, we took a closer look at the enormous potential of B2B e-commerce in general and, in particular, the role that different payment methods play in it.
In this report, more than 800 business buyers in German companies were questioned regarding their use of established payment methods, their satisfaction with them along various dimensions, and the potential of alternative payment methods, especially Buy Now, Pay Later (BNPL).
If you’re short on time, here’s the tl;dr version of the key conclusions we were able to draw from it:
Payment by invoice is still by far the most popular B2B payment method.
It is perceived as reliable and cost-effective but also as less simple, flexible, and fast. Buyers, therefore, call for simplification and automation of payment processing for payment by invoice to reduce the processing effort.
In contrast, it is the simplicity, flexibility, and speed of card payments and wallets like PayPal that are particularly appealing to shoppers—but here they are concerned about reliability and potential costs.
Lastly, business buyers showed a high degree of openness towards Buy Now, Pay Later, as it combines the advantages of “traditional” payment by invoice with the advantages of corporate credit cards or PayPal.
To give these findings additional perspective, here's a little more background info:
Payment by invoice is the most popular B2B payment method, followed by PayPal, direct debit, and corporate credit card
71% of participants state that the B2B online stores they use regularly offer payment by invoice. This is followed by PayPal and direct debit (both 42%) and payment by company credit card (38%). Demand for these payment methods follows supply: payment by invoice is almost always offered, and therefore most frequently used (43%). Surprisingly, the results show that PayPal—as a payment method originally from the B2C sector—is used just as frequently as, for example, the corporate credit card or direct debit.
"This may be related to the users' habits and their desire for simple payment solutions that they are familiar with from their everyday lives as consumers," concludes study author Prof. Dr. Erik Maier.
Payment by invoice is reliable but slow, time-consuming, and not very flexible
Although shoppers are satisfied on average with the most frequently used forms of payment, there are clear differences between the assessment dimensions. Payment by invoice, for example, is perceived as reliable and cost-effective but less simple, flexible, and fast. Buyers, therefore, call for simplification and automation of payment processing for payment by invoice to reduce the processing effort. Conversely, the simplicity, flexibility, and speed of credit cards and PayPal are particularly appealing to shoppers—but reliability and potential costs are a concern here.
"Payment by invoice often requires a registration or onboarding process in which business customers have to prove the actual existence of their company and their liquidity. Flexibility is therefore low and the processing effort high—this is also reflected in the results of the report. At the same time, the desire for an overall solution that is both reliable and cost-efficient as well as simple and fast is crystallizing," says Christian Grobe, Co-Founder and Co-CEO of Billie.
Shoppers who make purchases particularly frequently (>100 purchases per quarter) or with mainly large transactions (>5,000 euros basket size) are significantly less satisfied with existing solutions. In other words: The most valuable business customers could be the ones least happy with what online stores offer in their checkout regarding payment methods.
High degree of openness to Buy Now, Pay Later as a digital alternative to "traditional" payment by invoice
Buy Now, Pay Later enables payments via automatically generated invoices with flexible payment terms. Business customers receive the ordered goods immediately but do not have to pay for them until up to 120 days later. Merchants are paid by the BNPL provider when the goods are dispatched and benefit from automated creditworthiness and legitimacy checks.
"Buy Now, Pay Later combines the advantages of traditional payment by invoice ––reliability and cost efficiency––with the advantages of corporate credit cards or Paypal––simplicity, flexibility, and speed," says Christian Grobe.
The vast majority of respondents can imagine using Buy Now, Pay Later as a digital alternative to "classic" payment by invoice or other payment methods in the future (to the question "Could you imagine using BNPL as an alternative to invoice purchasing?" respondents answered with an average of 4.1 on a scale of 1="very unlikely" to 6="very likely"). This high willingness to use it is independent of shopping frequency and shopping cart size.
If you are interested in the complete report, you can download it here (in German).