The rise of BNPL has been one of the more significant financial trends in recent years. This payment method, which allows consumers to spread the cost of a purchase over several instalments across weeks or months, as well as the ability to defer payments is particularly popular among younger demographics. Some research suggests that up to 39% of millennials have used a BNPL service in the past year. More broadly, it’s expected that 93 million people will have utilised a BNPL service by the end of 2024, with the method forecast to be used across a total of $680 billion in global e-commerce transactions.

Until now, much of this activity has largely been associated with the B2C domain. Popular services such as Klarna, Afterpay, and Affirm have catered almost exclusively to this market. However, as we approach the end of 2024, change is in the air. Amidst new regulatory and economic pressures, it appears that several B2C BNPL providers are facing more uncertainty than ever before and may be forced to adapt how they operate to remain viable. Against this backdrop, a new form of BNPL is growing in popularity, namely B2B BNPL, which has gone from strength to strength in recent years.

The factors driving B2B BNPL success

With the integration of B2B BNPL solution, Billie, into platforms like Adyen and Stripe, coupled with substantial Series A funding rounds for companies like Mondu and  PastPay, the B2B BNPL sector looks to be picking up where its B2C counterpart left off. In fact, I’d argue that when one assesses the reasons underpinning this shift, it becomes reasonable to say that B2B BNPL may have the potential to surpass the success of B2C BNPL in the very near future. Following a breakout year in 2024, the next 12 months look set to be crucial for the development of the sector, which could be about to hit exciting new heights.

So, why is B2B BNPL succeeding while its B2C counterpart seems to be experiencing a cool down in popularity? For one, unlike in B2C transactions, where credit scoring can be more challenging, B2B transactions involve larger volumes and benefit from clearer and more transparent financial metrics. In recent years, the introduction of PSD2 and the forthcoming implementation of PSD3 have further enhanced reliability, providing third parties, such as BNPL providers, with more transparent access to financial information.

Moreover, B2B relationships are often long-term, with buyers generally less price-sensitive and more focused on value and operational needs. In many ways, a version of B2B BNPL has long been a staple in offline transactions through tools like factoring, trade credit, and credit insurance. As B2B purchasing shifts online, these traditional financial vehicles are evolving to support new digital customer journeys, and meet the demands of a changing marketplace. These factors make BNPL an even more promising and impactful solution in the B2B market, with the potential to drive higher adoption and success rates than in the B2C space.

Learning from the lessons

What’s more, the potential for negative industry sentiment to build around B2B BNPL seems far less likely than it was with its B2C counterpart. While on paper, B2C BNPL offered a more responsible and accessible way of making deferred payments on big-ticket items, it quickly developed a reputation as a solution leveraged by individuals to make everyday purchases against a backdrop of rising prices and inflation. Rightly or wrongly, some critics have since accused B2C BNPL providers of taking advantage of vulnerable people. While there is little doubt this wasn’t their intention, it’s hard to deny that it may have happened.

The business dynamics underpinning B2B BNPL, along with the more detailed credit histories and larger transaction volumes of those utilising these solutions, mean the sector looks set to face far fewer regulatory hurdles and less public scrutiny than the wave of B2C innovation that’s come before it. With that said, it’s essential for those in the industry to ensure they preserve their reputation for providing a valuable payment method to businesses, which aids them in managing finances and supporting growth. By focusing on these core values, the sector can retain the positive industry sentiment it rightly holds.

Going further than before

Effective cash flow management has always been critical for business success, but in today's uncertain economic climate, maintaining positive cash flow is crucial. Doing so enables companies to invest in new projects, expand their operations, and capitalise on emerging market opportunities. This is one of the reasons why B2B BNPL solutions have surged in popularity in 2024. Put simply, the sector is providing businesses with a powerful tool to optimise cash flow and to fuel expansion. In turn, companies are leveraging these platforms to unlock strategic and productivity-boosting developments.

Building on this momentum, several B2B BNPL companies, such as PastPay, look set to further transform B2B commerce by providing additional innovative financing solutions, which enable merchants and their customers to manage payments on their own terms. These platforms offer flexible payment options for seamless online and offline transactions, improving liquidity for companies across the continent. All in all, they fit a broader pattern of modern B2B-focused payment providers who are committed to empowering businesses throughout Europe to position themselves for sustained growth and success.