March 11, 2022

What are B2B Payments: Examining 2022 Trends and Projections for the Nigerian Market

B2B payments are a crucial part of any business. From Nigeria to the United States, e-commerce and companies that do business online and offline will need to make and receive payments. 

Understanding B2B payments

B2B payments are a crucial part of any business. From Nigeria to the United States, e-commerce and companies that do business online and offline will need to make and receive payments. 

The B2B payments market is expected to grow to $23 trillion by 2022. In this article, we’ll provide an overview of B2B payments, some examples, and discuss the trends in this field as well as look at projections for the Nigerian market.

So what are B2B Payments?

Simply put, B2B payments are transactions made between businesses. Historically, such payments were made in cash and carried out via face-to-face meetings.

Over the years, these types of payments have evolved considerably. Businesses no longer need to meet in person to settle business transactions. A business can make payments to another company located halfway across the world with just a few clicks. This evolution can be attributed to the emergence of electronic payment infrastructures.  

The State of B2B Payments in Nigeria

According to this Mckinsey report, Nigeria is one of the top countries as far as electronic payments are concerned. The Nigerian business-to-business (B2B) payments industry is rapidly changing and on the verge of a major transformation as emerging technologies and payment methods are challenging the status quo in this vital part of the market.

Several factors are contributing to these changes, for example, the Central Bank’s Cashless Policy, deepening smartphone and internet penetration, and a new wave of financial technology startups. Key fintech players offering B2B solutions include Interswitch, TeamApt, Okra, Mono, Paystack, Flutterwave, Verto, and new entrants like yours truly Duplo with a focused target on FMCG and multi-branched enterprises.

Has COVID-19 Affected B2B Payments?

With Covid came the need for less contact in business transactions which might have an impact on the increase in the demand for contactless, electronic payments.

A study by Harvard Business School found that the fact that we live in a globalized world means that the economy is likely to struggle — especially in the wake of COVID-19. But, this study  also found that the companies who deal in B2B  will be able to lead their organizations back into recovery as soon as possible. 

Gaps and Opportunities In the Nigerian B2B Payments Market

The business-to-business (B2B) payments market is an exciting one that’s full of innovations, challenges, and opportunities. 

As internet penetration grows in the country, there is an increasing rise in digitization across sectors of the economy which will lead to more ways to make payments. This rise follows a faster trajectory for B2C payments. B2B payments on the other hand, are more complex than B2C payments due to the nature of transactions involved. 

With this complexity comes many challenges like late payments, reconciliation bottlenecks and frauds which can affect the overall operations of a business and its relationship with other businesses. 

It is worthy of note that in some informal sectors of the economy where cash reliance is high, agency banking is pushing the frontiers for non-cash transactions both for B2B and B2C companies providing these businesses with opportunities to prevent fraud and grow their revenue. 

According to a 2020 report, the global B2B payments market is expected to top $35 trillion by 2022 representing 30% growth from the last two years. This should come as no surprise given the growth in eCommerce over the past ten years. 

As more companies embrace online payment platforms and other digital finance tools, small business owners and entrepreneurs need to stay up-to-date on current trends in the market.

As part of our research for solving these challenges in Nigeria’s B2B space, we looked at trends in digital B2B payments as well as emerging technologies that will shape the future of digital B2B payment systems by 2022.

Here are some of our predictions for what lies ahead:

Projections and trends and Insights in Nigeria

There’s no doubt that the Nigerian B2B payments landscape will likely see a lot of changes in 2022. The nature of business-to-business (B2B) payments has evolved tremendously in recent years, and with the global pandemic, we can expect this trend of change to continue. 

What kinds of changes are consumers and businesses alike expecting to see? And what does it mean for businesses in Nigeria?

B2B Payments 2022 Trends and Projections for Nigerian Duplo fintech graphic

Market Trends and Insights

  • Digital payments make up the large majority of payment volumes in Nigeria and are expected to reach 7.7 billion per year by 2025, a 45% growth from 2019. Nigeria will witness an accelerated transition to digital payments over the next five years according to this report by Business Insider.
  • In 2022, B2B payments will grow by 24%.
  • 64% of Financial Institutions are willing to adopt new technologies to consumerise B2B payments.
  • The volume of cross-border B2B transactions to increase by 30%.
  • Growth and adoption of digital platforms will be fuelled by the growth in e-commerce businesses.
  • Growing preference by SMEs for digital platforms to manage their books, businesses, and day-to-day operations via automation.
  • Physical infrastructures will increasingly be replaced with e-invoicing and e-instructions.

Pivoting to Digital Innovations: How Businesses Can Leverage B2B Payments

It is a good time to digitize your business payment infrastructure. 

Making the switch to digital ways of doing business is a decision every business would need to make to stay afloat. A digital transformation is no longer just an option on the menu, it’s the whole buffet. If a business wants to remain competitive, they need to adapt quickly to the changes in the B2B payments landscape.

B2B payments are only going to get more digital in Nigeria and it’s important to understand them.

What Can Businesses Do?

Companies need to build a blueprint that’s adaptable to change, as well as develop a diverse partner ecosystem that can contribute to growth.

Another step a business can take is to consult with digital payments experts in choosing the appropriate platforms.

Two main factors to consider when choosing a B2B Payment solution are

  • Ease of use: It should be a product or service that is easy to customize. It should also have minimal downtimes.
  • Ease of setup: The integration and setup should be straightforward, quick, and should not disrupt business.

Tying it All Together

As we look at these trends and projections, we get a clearer picture that in the B2B payments industry, there is no single channel or technology which will gain dominance and serve as the only channel for businesses to use. 

Each sector is at different stages of adoption, thus there is a need for all technologies to come together to make payments easy, available, and transparent across  all channels.

Despite all the challenges facing the Nigerian market, some factors are helping to stimulate B2B payments in Nigeria. These include the growing strength of internet connections and penetration, increasingly powerful mobile devices, and the rising number of e-commerce platforms, as well as the heightened adoption of online shopping.

Sure, the most common payment method in Nigeria is still cash. However, B2B payments platforms are looking to replace these in typical business scenarios and this year will play a pivotal role in this transformation. 

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