Real-Time Digital Payments: B2B, C2C, and B2C

In the United States where the B2B (business-to-business) digital payments market is expected to reach $26.742 trillion by the end of 2021, it is expected that the real-time payment systems (RTP) will enjoy enormous benefits, even though they are only a fraction of the market. In the US, the prediction is that RTPs will reap huge profits if they can gain even a fraction of the market. This holds for B2C payments as well.

In order to enable real-time confirmation of payments, backend providers need to pre-finance the collateral of their sending partners. B2B payments are slow to be digitized compared to other payment methods. For this reason, high-quality cross-border B2C (business-to-consumer) payments are typically handled through a correspondent banking network (CBN).

Cross-Border Payments in Multiple Forms

The increasing pace of change in the cross-border payments market is linked to changing consumer demand. Alternative solution providers offering cost-effective and transparent cross-border payment solutions gain a competitive advantage over banks. To address this, senders, consumers, and merchants offer digital cross-border payments, facilitated by money transfer operators and backend networks.

Online shopping makes shopping easier and less time-consuming, enabling 24-hour sales, fast delivery, and easy returns. E-commerce also makes it easier for companies to reach new global customers. As customers from all over the world shop on e-commerce sites, companies are no longer constrained by geographical or physical barriers.

C2B (consumer-to-business) includes influencers, photographers, consultants, and freelance writers, as well as independent freelancers, small businesses, and large corporations that can sell their goods and services on a large scale.

E-commerce (C2B) is when a consumer makes his or her services or products available to a business for purchase. C2B reverses the traditional e-commerce model, which means that individual consumers make their products and services available to businesses and buyers. Consumer sales take place on platforms such as eBay, Etsy, and Fivver.

B2C and B2B e-commerce include sales by companies such as manufacturers, wholesalers, and retailers. B2C e-commerce refers to transactions that businesses and consumers conduct online. It refers to the sale of goods and services by companies through an online sales portal. 

When online transactions take place between a company and a private user (consumer), B2C trading is the term used to describe the process. Consumer-to-consumer (C2C) customers are customers who represent a market environment in which one customer buys goods and another customer uses a third-party business platform to facilitate the purchase. 

For example, when you buy shoes from an online shoe retailer, it is a transaction between a business and a consumer. Business to Business (e-commerce) is non-consumer-oriented and combines products, raw materials, and software products. 

The size of the market

  • Business-to-Business (B2B) transactions make up the largest share by far, expected to account for US$150t.
  • Consumer-to-Business (C2B) transactions, such as cross-border e-commerce and offline tourism spend, are forecast to reach US$2.8t.
  • Business-to-Consumer (B2C) transactions, which include wage salaries or interest payments, are expected to amount to US$1.6t in 2022.
  • Consumer-to-Consumer (C2C), or remittance payments, contribute the least – expected to reach US$0.8t in 2022.

Whether it is buying software tools, cloud-based products, or digital assets, this represents a large percentage of e-commerce transactions. Wholesale products are sold to retailers, who then sell them to consumers. Suppliers demand punctual payments for their goods to flow into the store. 

B2B (Consumer to Consumer, C2C to Business) – Consumer B2C payments benefit from shorter billing periods and offer more financial flexibility and control. B2B payments also have shorter processing times and benefit from greater monetary versatility and control. Business to Consumer (B2C) is a direct business relationship between companies, producers, service providers, and end consumers.

The positive impact of fast payments is transforming businesses and consumers alike and has the potential to streamline trade like never before. Technology can improve business-to-consumer (B2C) interaction through apps, mobile payments, and e-commerce software that streamlines simple transactions. Fast payments also serve to use security features to help businesses and consumers manage the risks associated with payment transactions. 

Credit cards are the preferred payment method for 53% of all transactions, followed by digital payment systems (43%) and debit cards (38%). Digital payment systems are the preferred method in China and Western Europe, while cash is the preferred method in Eastern Europe, Africa, and the Middle East. Good user experience comes down to good graphics, fast website loading times, and easy payment; PayPal transactions have a 70% higher checkout rate than non-PayPal transactions. 

As a result, both consumers and businesses benefit from the C2B model. Companies spend less marketing dollars to generate revenue, have lower average order values, and have fewer recurring orders than their B2B counterparts. The decision-making process for B2C purchases is shorter for companies because they buy items of lower value and thus have a shorter sales cycle. 

With more than half of US B2B companies offering their entire product range online, it is not surprising that in 2017 B2Bs are predicted to generate $7.6 trillion, dwarfing the B2C market, which is estimated at $2.4 trillion. In addition, $9.599 trillion will be processed through automated clearing houses (ACH) this year, with companies using ACH eager to move to faster digital payment options. 

The Net New Payments Network (Rails) and its Real-Time Payments (RTP) system (new central payment infrastructure in the US for 40 years) enable businesses and consumers to send, cancel, and process payments instantly. In addition to fast transactions, RTP also meets consumer protection criteria to prevent fraud and enhance security. 

Finally, we looked at all areas of e-commerce, including its different types, its history, its growth over the years, and its impact on the behavior of consumers and businesses on the Internet. If you have any insights on the use cases and practical applications for fast payments for B2B and B2C business transactions as well as consumer-business transactions (C2C) transactions, share with us or comment below!

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