Nordic B2B Sector and Consumer Digital Payments

Nordic countries are well-known global leaders when it comes to digital and mobile payments innovation, even bypassing larger economies such as Germany and France on mobile payments adoption.

But despite their strong reputation in technological advances, there are still a number of areas, particularly in the business-to-business (B2B) space, where legacy systems and infrastructure are impeding growth and needing a serious innovation boost.

“The Nordics is seen as having a [huge] competitive advantage when it comes to digitalization, but in the business-to-business industry, [it’s as if we’re] 10 years behind consumer-based payment experiences, ”Markus Jansson, chief product officer at Stockholm-based B2B payments firm Payer, told PYMNTS in an interview.

One of the reasons for this wide gap, he said, is that large enterprises, which are formed following several mergers and acquisitions, end up having multiple enterprise resource planning systems (ERPs) that have made the digital transformation process more complex down the line.

“Imagine the complexity of having one legacy system and one type of ERP system, and then imagine how challenging it is when you have five different ones and you are trying to effect change,” Jansson remarked.

To solve this, the Nordic payments technology platform is helping B2B merchants streamline payment processes across the entire order-to-cash value chain, focusing on handling conversions as well as payment and finance automation of receivable (AR) accounts.

All this, he added, is to ensure that the digital B2B payment experience attains the same standard as the more developed consumer side of things.

Read more: Volvo Teams With Payer for Service and Repair B2B Optimization

To date, notable corporate clients the Swedish firm has served include Volvo Financial Services, the captive financing arm of Volvo Group, enabling the car manufacturer to optimize payments and improve the customer experience for auto service and repairs.

Tilting the Balance Towards Digital

One major issue many organizations are facing is transitioning from the manual, time-consuming invoicing and billing processes, Jansson noted. Although larger companies might have highly developed automation systems in place, that is far from the norm across all business markets.

“One of the prospects we recently spoke to – a large enterprise listed on the Swedish stock market – had about 20% of all payments automatically matched while the remaining 80% was manually handled,” he said.

This issue can be due to a firm receiving payments for a specific amount and having that tied to several types of orders or credit notes. Each time that happens, a person is required to manually check and process the payment, further slowing down the process, he explained.

But with Payer’s solution and modular application programming interface (API) platform, firms can significantly increase the level of automation, boosting the number of payments processed automatically by up to 96%, up from the 35-40% experienced with artificial intelligence-backed solutions .

“This, I would say, is the key competitive edge that we provide in the automation space today,” Jansson said.

Related news: Payer and Resurs Bank Partner to Serve Nordic Retail Market

To further support the development of the Nordic retail market, the company recently announced a partnership with leading Nordic commercial bank Resurs to give retailers a one-stop-shop for subscription management via its “consumer grade” enterprise platform, helping to enhance conversion and promote automation across traditionally manual systems.

Open Banking Innovation

Open banking is playing an increasingly prominent role in Payer’s business, Jansson said, even though it has taken “a lot of trial and error” to get the system to work efficiently – especially in situations when there are several signees involved in approving a payment and one of them does not have access to the bank.

See also: Nordic Mobile Wallets Must Collaborate to Fend off Competition From Global Players

But while there may be clear limitations to the regulatory requirement, he added that some of its benefits – for example, the low cost corporates incur when receiving payments, compared to card payments – cannot be overlooked.

Moving forward, he pointed to new changes in business models coming onto the market like the subscription economy and the emergence of industry 4.0 as more and more companies change their way of selling and adopting technologies like autonomous payments.

And with the emergence of these new models driven by technologies such as 5G, Jansson said it’s important for payment providers to “have a solution ready for that change.”

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