Strategic collaborations, fund raising deals, and market expansion continues to drive B2B BNPL growth in 2023

 


The B2B BNPL market is growing at a rapid rate amid the current macroeconomic environment. With traditional lending becoming increasingly challenging for many businesses, BNPL has emerged as a viable alternative for managing cash flow and expenses. One of the main challenges that businesses face when seeking traditional bank loans is the stringent lending requirements. Banks typically require businesses to have a strong credit history and significant collateral to secure the loan. This can be particularly difficult for small businesses and startups that may not have an established credit history or significant assets.

In addition to the stringent lending requirements, conventional bank loans have also become expensive amid the current macroeconomic environment. With central banks hiking the interest rates globally, traditional lending is projected to become even more expensive from the short to medium-term perspective. With high interest rates and fees, businesses are finding it difficult to manage their cash flow and profitability. This has become particularly challenging for small and medium-sized businesses, who are still reeling under the effect of global pandemic outbreak.

B2B BNPL is offering such small and medium-sized enterprises (SMEs) with a better alternative to conventional loans. Less stringent lending requirements has made it easier for SMEs to access working capital. The growing demand for BNPL in the B2B sector, coupled with strategic collaborations, fund raising deals, and market expansion, are projected to drive the B2B BNPL industry growth in 2023.

·         In March 2023, Billie and Mollie, two leading payment service providers, have announced a strategic partnership aimed at expanding BNPL services to B2B customers across Europe. Through this partnership, businesses will have access to flexible and customizable payment plans that can help manage their cash flow and expenses. By joining forces, Billie and Mollie aim to provide businesses with a seamless and integrated BNPL experience.

As part of their pan-European collaboration, Germany has become the first market to launch, enabling Mollie's merchants serving business clients in the country to access Billie's payment methods. This marks a significant milestone in the partnership and lays the foundation for further expansion into other key markets in 2023.

Venture capital and private equity players have also continued to show keen interest in the B2B BNPL space. In Q1 2023, several firms operating in the sector have raised multi-million-dollar deals. From Mondu to Tranch, many players are attracting venture capital and private equity funding.

·         In March 2023, Two, a Norwegian B2B BNPL firm, announced that the firm had raised a €18 million in its Series A funding round led by US-based VC Shine Capital. Sequoia Capital, Day One Ventures, and LocalGlobe also participated in the Series A funding round.

This funding will enable Two to expand its operations to new markets in Europe and other regions, building on its existing presence in the United Kingdom and the Nordics. With this investment, Two is well-positioned to continue its growth and innovation in the BNPL space, providing businesses with flexible and accessible financing options that can help manage their cash flow and expenses.

Read More - The rising demand for flexible B2B payments will aid the growth of the BNPL industry in 2023

Two reports impressive quarterly growth of 243% across the Nordics and the UK, and boasts a 58% share of B2B payments made through the online channels of its nearly 200 active merchants. The startup charges sellers a transaction fee ranging from 1.5% to 3.5% per transaction. Two's attractive transaction fees, combined with its rapid growth and market share, make it a compelling option for businesses seeking affordable and accessible financing solutions.

The firm has developed a system that enables sellers to access capital quickly by scoring and underwriting transactions, with a remarkable approval rate of over 90%. To achieve this, the startup uses multiple credit underwriters, including its own credit engine, to assess each order for risk. This approach allows Two to expedite the underwriting process and provide sellers with fast and reliable access to the capital they need to grow their businesses.

·         Like Two, many other B2B BNPL across Europe are seeking to expand their presence in the region. Mondu, for instance, announced that the firm has launched its operations in the United Kingdom in March 2023. This makes the United Kingdom fourth country for Mondu since its inception in 2022.

Mondu has maintained its rapid growth trajectory since the beginning of 2023, with the announcement of a $13 million Series A extension round in January. This brings the startup's total equity and debt funding to $90 million since its inception in October 2021. Mondu also recently launched a new solution called MonduSell, which enables B2B merchants to process orders in real-time and offer flexible payment terms across multiple sales channels, including field sales, telesales, and email orders. In addition to its successful launch in the United Kingdom in March 2023, Mondu is also expanding its C-suite. These developments position Mondu for further expansion and innovation in the B2B payments space.

Read More - Affirm bids farewell to the Australian market amidst tough competition in 2023

Read More - Klarna and Sezzle are eyeing higher revenue and net income growth in 2023

While many of these B2B BNPL firms are targeting SMEs in Europe, big banking giants are targeting large multinationals through their BNPL offerings. Santander and BNP Paribas have both launched BNPL offerings specifically for large multinationals. BNP Paribas, in March 2023, partnered with Hokodo to enter the B2B BNPL space. On the other hand, Santander partnered with Allianz Trade and Two to launch a B2B BNPL service for large businesses in Europe.

All of these strategic collaborations, including big banking giants and innovative fintech firms, are further accelerating innovation and competitive landscape in the fast-growing sector. This, coupled with fund raising deals and market expansion strategies will keep aiding the B2B BNPL sector growth from the short to medium-term perspective.

 

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