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The B2B Payments Market Size and Future

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedNov 20212 min read

In 2020, overall payment volumes declined by 11% when large parts of the economy shut down and millions of people across the world started working from home. But the pandemic also saw some serious changes to how people and businesses paid.

Contactless, online and mobile wallet payments became the norm overnight and while it might have initially seemed as if this was going to be a temporary change, it’s starting to feel like it’s here to stay.

Despite these drastic changes, or perhaps even bolstered by them, the B2B payments market continues to climb. It was valued at $870 billion in 2020 and has been projected to reach $1.91 trillion by 2028. But what exactly is the B2B payments market and why is the market size so large?

B2B payment

As the name implies, the B2B (business-to-business) market involves transactions between businesses. Generally speaking, this takes the form of a transaction between buyer and supplier for goods and services. B2B payments are influenced by several variables that don’t directly impact customer payments such as frequency, volume and interest charges.

B2B payments market – an outlook

Of course, the pandemic took its toll on the sector, with bans on global imports and exports resulting in slow growth. However, the increase in popularity of digital payments might have been beneficial in the long term, particularly for digital disruptors.

There are around $120 trillion in B2B payments made globally every year and, traditionally, digital payments lagged behind the B2C (business-to-consumer) market quite considerably. Before the pandemic, around 33% of B2B expenditure was electronic, compared to around 70% of B2C expenditure.

There are several factors at play here including a lack of investment in fundamental IT infrastructure and a lack of compatibility between electronic payment systems. The pandemic, however, forced businesses to accelerate their digital payments and helped them understand the potential of digital adoption.

Expansion and contraction

The last 18 months have seen thousands of businesses (particularly SMEs) forced to cease operations, which has had a negative impact on sector growth. There has also been a surge in fraud cases among business payments.

However, there has also been an increase in partnerships between B2B payment service providers and FinTech companies, which is expected to create consistent growth within the next few years.

The B2B payments market by segment

It was the larger enterprises that dominated the sector in 2020 as the pandemic forced major players to accelerate their digital transformations. In the next few years, however, it’s the SME market that’s expected to grow as more cross-border transactions are made.

Regionally, the B2B payments market was strongest in the Asia-Pacific (APAC) region in 2020 thanks to a significant rise in virtual card payments. It’s also more common with domestic payments than with cross-border payments, though there is expected to be a significant rise in B2B cross-border payments over the next eight years.

Who stands to benefit from the growing B2B payments market?

Digital adoption is innately valuable to everyone involved when it comes to the B2B payments market, particularly as the online payment market size and mobile payment market size continue to expand. Digitisation means that certain parts of the payment workflow can be automated and made more reliable and that labour costs can be reduced dramatically.

It’s not a change that’s on the way either; it’s already happening. Major card networks like Visa and MasterCard have already made their intentions clear by investing in their own B2B payment hubs and there has been major investment in B2B payments made by venture capital and private equity funds in the last few years.

As investment in new technologies continues, the market is only going to get larger and we’re all going to benefit.

We can help

If you’re interested in finding out more about the B2B payments market, or any other aspect of your business finances, then get in touch with our financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.