B2B marketplaces serve companies that sell to or buy from other companies. This opens up opportunities for all industries and their market is the world. As more companies channel their business through these marketplaces, transactions become more complex, and that’s where FinTech as a Service (FaaS) comes in. Jason Simon, an expert on FinTechs and eCommerce, explains their relationship and why they are said to work hand in hand with B2B markets.
FaaS simplifies the complex, allowing companies to accept payments from buyers, make payments to sellers, scale, and thrive. Simon, who has years of experience working in the environment that FinTechs envelop, drew on the business expertise of Rapyd, which just received $300 million in funding, to identify three key benefits for marketplaces to adopt FaaS platforms:
First and foremost is the increased offering of preferred local payment methods and currencies for buyers and sellers. “By offering an ever-increasing pool of preferred payment methods and payments, marketplaces can connect buyers and sellers regardless of their geographic location by quickly adapting to a global audience,” Simon explains.
Rapid stability is also a fairly important point. In the past, the growth of B2B eCommerce was hampered by the need to create a payment infrastructure in new markets. Today, global eCommerce is enabled by simple API integrations that can add payment and checkout capabilities to applications, websites, and business processes. FaaS platforms enable sellers to accept payments from customers around the world, not only via credit cards (as they are not always the preferred method, especially in B2B) but also bank transfers and e-wallets.
And finally, international fraud management becomes simpler. Fraud is on the rise worldwide and companies buying and selling abroad face unique challenges, making fraud management systems an invaluable component of any marketplace. FaaS solutions incorporate fraud management into payment solutions to protect cross-border businesses as well as payment methods, including cards, eWallets, and bank transfers.
“Possibilities abound and are not confined to any singular industry,” Simon points out. “By applying FaaS in B2B commerce, companies, regardless of whether they are large, SMEs or small businesses, are instantly ready to support business opportunities and grow cross-border securely and quickly.”
It’s no secret to anyone that the market has begun to mature rapidly for a variety of reasons. First and foremost, technology-linked financial solutions provide a high degree of efficiency and security. In addition, acquiring new customers is easy, given the low barriers to entry. Simon says, “I don’t dare to estimate the size of the market for the next few years, but I think we can already identify some of the key drivers of global corporate and business development.”
The development of the digital services market is constantly occurring. On a global scale, large corporations with capital dominate, imposing their means of payment. In Europe, for example, the European Commission is pursuing market unity so that these means serve for consumption (stores, retailer) and streaming (audiovisual services). The digital market reduces the impact of currency fluctuations and benefits the end consumer.
Then there is global management, which means offering advice, counseling, and management of personal finances. “The first visible impact has been the creation of a market of mobile applications for the organization of our accounts. With some good sense and good advice, money is saved, fees are reduced, pension plans are personalized, investment opportunities are identified, among other actions. This management, based on our behavior, generates predictive intelligence,” Simon asserts.
And then there is the ‘unbanking’ of financial operations. The “unbanking” of financial transactions that need speed is not based on more competitive interest rates. Its value proposition is based on other principles: immediate liquidity, invoice capture and promissory note discounting, elimination of personal guarantees, digital transactions without offices for the global market, or deferral of collections and payments, among others. Here we can include crowdfunding management and fundraising operations.
As the B2B FinTech industry continues to grow, it will become easier for smaller companies to implement automated workflows and purchase-to-pay processes that larger organizations currently use. This will make it easier for them to compete with larger companies and help level the playing field.