Segmenting the $1 trillion B2B payments market: Our graphical take (Version 1.0!)

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The B2B payments market has a lot of solution providers, and it's time for Spend Matters to highlight some key players across the market landscape. But first, let's take a look back.

Goldman Sachs produced a report in 2018 that provided an overview of the B2B payments market at the time. Their premise was that B2B, as opposed to B2C, C2C or B2G, would be the next untapped market opportunity for the payments industry.

Goldman reached this conclusion based on three facts:

  1. The majority of invoices are still processed manually and paid by check.
  2. New payment companies are entering the market with faster and lower-cost invoice processing and payment solutions.
  3. The biggest revenue and cost-savings opportunities are for small business, where they claim 80% of invoices are still manual and paid by check.

The bank suggests the net result of these new B2B solutions will be $1.5 trillion in productivity for global small business and a $1 trillion revenue opportunity (total addressable market, or TAM) in non-bank payment and software products.

Now we throw a lot of numbers around in this day and age, but $1 trillion will make anyone stop and look. Specifically, Goldman says they see a global opportunity of $950 billion across invoice processing, AP payment processing, working capital management, factoring and cross-border payment optimization.

OK, that’s a lot to lump together and we’re not sure how they fit together, but we think directionally, it is clear there’s lots of noise around the B2B payment space.

Here is how Goldman breaks out the $950 billion opportunity:

B2B Landscape — Segments & Public and Private Examples

(Source: Goldman Sachs)

Double-Clicking on Goldman’s Perspective

Both the domestic and cross-border B2B payment space is large, complex and fragmented. To date, the areas have been dominated by banks that have the relationships. After all, each legitimate business has a bank account!

But non-banks are proving to be the challengers here. In terms of cross-border transactions, they are developing innovations through easy-to-use user interfaces, bypassing correspondent networks to move money, building the infrastructure of global accounts and licenses to move funds.

Goldman squarely sees this as a space that will be dominated by the card networks, and mentions that Mastercard is strongly positioned to take a key role in the B2B payment ecosystem and derive a meaningful portion of its revenue from B2B. Both Visa and American Express are investing in this space aggressively as well.

Our View

Our segmentation of the non-bank B2B payments market at Spend Matters is a bit different than Goldman’s take. We see B2B payments as the last mile for companies on both sides of the buying and selling equation.

Spend Matters’ view when looking at this from a corporate perspective is best understood as a visual guide to the providers:

Categorization of various non-bank B2B payments vendors for procurement

(Click image to enlarge)

Please note that this graphic is not an exhaustive representation of the B2B payment solution space. We have included an indicative list of providers in this initial version, although there are likely a hundred more that could be added.*

In Version 1.0 of our segmentation, there’s a range of payment providers. It includes:

  • Firms that sell solutions direct to corporates (e.g., CFOs, treasury, AP, AR, procurement, etc.)
  • Vendors that work with banks (which in turn sell solutions to corporates)
  • Those that sell to both, directly

In terms of capabilities, it includes those:

  • Offering payment hubs as an extension of receivables and payables processes
  • Developing real-time payments
  • Enabling check-to-Epayment capability
  • Digitizing payments and currency through stablecoins and cryptocurrencies
  • Improving cross-border payments
  • Integrating card-based models into current processes and systems
  • Introducing virtual account structures to replace the need for a correspondent bank network
  • Driving working capital outcomes — based on digital lending, e-factoring, supply chain finance and more

Moreover, there are partnerships that are occurring between the card networks and product companies, and between source-to-pay / procure-to-pay (S2P / P2P) / order-to-cash (O2C) and product companies.

In short, it’s a very confusing world, but one that is driven by innovation, infrastructure building and regulation. All of that, in turn, is making B2B payments faster, better, cheaper and more relevant — to look at as a primary S2P/P2P and O2C business lever — than ever before

The pace is fast-moving.

But here at Spend Matters, our goal is to monitor and report on it closely, as payments, working capital, cards, FX and more converge.

Stay tuned for successive versions of this market map, as we go deeper into the solutions, technologies, regulations, infrastructure and emerging opportunities that will help corporates better understand the who’s, the what’s, the why’s, and, most important, the how.

New to our coverage of payments? Start here.

Want to get in touch with us on payments? Don’t hesitate to drop us a line: dgustin@globalbanking.com + jbusch@spendmatters.com

* In subsequent coverage on Spend Matters PRO, we will flesh out and explore each segment in more detail — as well as update the overview graphic.

Appendix

Vendors included in our visual segmentation V. 1.0

ACCOUNTS RECEIVABLE — INVOICING AND BILLING

Enterprises/Mid-Market

  • BillTrust
  • HighRadius

Small Businesses

  • Bill.com
  • FreshBooks
  • Intuit Quickbooks
  • Paysimple
  • Paystand

THIRD-PARTY INFRASTRUCTURE

  • Banking Circle
  • Bottomline
  • Currencycloud
  • Nets Payment Solutions
  • Nvoicepay
  • Plaid
  • Ripple

ACCOUNTS PAYABLE — INVOICING, PAYMENTS, TREASURY

Enterprises/Mid-Market

Small Businesses

  • ACOM Solutions
  • AvidXchange
  • CPS Payment Services
  • Mineraltree
  • Paymerang

CARD NETWORKS

  • American Express
  • Discover
  • Mastercard
  • Visa

CROSS-BORDER ENABLEMENT

  • Earthport
  • INTL FCStone
  • PayPal
  • TransferMate
  • Transferwise
  • Veem
  • Western Union

EARLY PAY INNOVATORS

  • C2FO
  • Greensill
  • Previse
  • Violet

E-COMMERCE

  • Adyen
  • Boost
  • Payoneer
  • Stripe
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