Innovation is continually redefining the parameters of what’s possible in business-to-business (B2B) payments.
And across today’s operating landscape, one defined by digital transformation and real-time decision-making, sometimes it’s the smallest innovations in payments that can have an outsize impact.
Enter: micropayments. As B2B industries such as manufacturing, logistics, marketplace eCommerce, cross-border facilitation, and more prioritize precision and flexibility, micropayments are emerging as a solution that can help offer a scalable payment mode that aligns costs with usage.
For example, logistics billing models have relied on broad estimates and generalized fees. Micropayments can transform this approach, aligning costs with actual service usage and enabling more precise accounting and granular, transaction-based billing for specific services, such as partial container use or small-scale shipping. Micropayments can also be used for services such as real-time tracking updates, per-mile or per-weight charges in freight, and other high-frequency but low-value transactions.
The challenge, at least in the U.S., is making micropayments work across an ecosystem where checks and card-driven innovations like virtual cards dominate. For B2B payments, card-based payment processing fees may end up outweighing the small value of the micropayment.
Against that backdrop, micropayments that leverage embedded finance or pay by bank are emerging as an attractive alternative to rails that are ill-suited to the cost economics of smaller payment volumes.
Of course, as with many B2B innovations, overcoming the challenge of acceptance remains a hurdle — but it is one that education and adoption may yet prove to be capable of clearing.
Read more: How Embedded Payments Help Businesses Own Key ‘Micro Moments’
From manufacturing to the Internet of Things (IoT) and beyond, B2B industries are finding that breaking down financial transactions into smaller, precise increments can potentially unlock new efficiencies, improve cash flow management, and foster seamless collaboration.
Within connected manufacturing, for example, IoT and machine-to-machine (M2M) services thrive on constant data exchanges. Devices communicate in a continuous stream, enabling automation and optimization — but these transactions come with costs. Micropayments can serve as natural fit here, allowing businesses to pay for exactly what they use.
Similarly, incremental charges for real-time analytics or network bandwidth can allow businesses to scale operations without overcommitting to costly, all-encompassing contracts.
“The B2B money movement space has not yet benefited from some of the real innovations,” Seamus Smith, executive vice president group president at FIS, told PYMNTS, noting that checks still account for “nearly 40%” of B2B payment volume in the U.S., even though they are prone to fraud and reconciliation errors.
The PYMNTS Intelligence study “Cost Concerns Hinder Merchants’ Pay by Bank Adoption — But Current Payments Could Cost More,” a collaboration with Trustly, found that, despite concerns about implementation costs, pay by bank could be more cost effective than keeping up with companies’ current methods, such as credit and debit cards.
Read more: Clearing Up Pay-by-Bank Confusion Requires Education and Incentives
The growing reliance on real-time data for decision-making has turned DaaS (data-as-a-service) into a tool for businesses across industries. Micropayments could prove to be central to how these services operate, allowing companies to pay only for the data they consume.
Financial firms, for instance, may incur charges per API call for accessing live market data, while retail businesses might make incremental payments for customer analytics that drive personalized marketing strategies. Subscription fees for small, tailored data packages ensure affordability for businesses of all sizes, without the need to invest in expensive, underutilized datasets.
While the potential of micropayments in B2B is clear, challenges remain. Transaction fees, particularly in cross-border scenarios, can eat into the margins of microtransactions. Additionally, businesses must invest in infrastructure capable of handling high volumes of small, rapid payments without compromising speed or security.
B2B marketplaces, from procurement platforms to freelance networks, also hold the potential for micropayments to streamline interactions and reduce friction. These platforms often charge transaction fees or small commissions, ensuring that users pay only for the specific services they consume.
For example, a freelance platform might charge businesses microfees for job postings or premium listings, while a procurement marketplace could implement transaction-based billing for individual sales.
Of course, for any B2B innovation to effectively scale, the needs of the parties on either side of the transaction must be considered.
As Chris Jameson, head of product management for Global Payments Solutions (GPS) EMEA at Bank of America, told PYMNTS, hybrid solutions like Bank of America’s new Virtual Payables Direct are proving that innovation can have a true business impact when it bridges the gap between buyer and supplier needs.
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