• Adam Marks, VB Business Development at Fintex Capital


• 01.11.2021 06:30 am
#finance #payment

Buy-now-pay-later: It’s the global fintech revolution enabling shoppers to pay for everyday products in instalments, and arguably marks the greatest disruption in consumer finance since credit cards. 

Yet whilst the likes of Klarna have taken the world of B2C finance by storm, there has been very little innovation or disruption within the B2B payments world. Three factors have however changed this.

The first factor in the rise of B2B BNPL is the maturing of financial technologies that makes B2B BNPL possible. Today, digital solutions – such as the wide use of open banking allowing fast and accurate credit checks and automated KYC and AML – meaning lending decisions can be made in minutes. 

The second factor is the proven B2C model, which has given businesses and B2B credit providers confidence that the model can work. With B2C BNPL having transformed the consumer market, businesses and lenders have started to think about how to replicate this idea in the B2B world.

The third and final factor that has accelerated the development of B2B BNPL has been the economic impact of the pandemic. The squeezing of finances – particularly for SMEs – has resulted in pressure on cash flow.

Despite the roaring success of companies such as Klarna, there does remain considerable concerns over irresponsible B2C lending, the inability of borrowers to maintain their repayments and the risk of them spiralling into debt. This is why responsibility must be at the heart of a B2B BNPL culture.

Responsibility starts with lenders like us, Fintex Capital, who provide the finance allowing businesses to become BNPL vendors in the first place. It is our responsibility to ensure that we are only partnering with reputable companies that, in turn, will use this function responsibly. It is also our responsibility to work with businesses so they understand how to be lenders.   

It is then the responsibility of those companies to undertake due diligence on their customers, including assessing the credit quality of their clients. 

With businesses increasingly modelling their online infrastructure along the lines of an eCommerce site, BNPL solutions will also need to be accessible, flexible, integrated at point of sale and compatible with everyday payment partners.

With BNPL having revolutionised consumer finance in recent years, business finance is now set to undertake a similar transformation. Thanks to fintech innovation, the potential for BNPL finance to unlock growth and scalability is now vast. It will be up to all of us – tech innovators, financers, lenders and customers – to ensure that this lending power is deployed responsibly.