Innovation in Business to Business Payment Services: a contextual approach to future innovation

Abstract: Payments take place every day in exchange for goods and services. There are a large variety of different methods which can be used to make a payment, and multiple scenarios in which payments take place. Recently there has been a significant amount of innovation in the Payment Services sector, however the majority of this innovation has occurred in the Business-to-Consumer (B2C) market, leaving the Business-to-Business (B2B) market relatively devoid of innovations. This raises the question, why are there limited successful innovations in B2B Payment Services? Furthermore, are there areas for innovation in the realm of B2B Payments? To explore this perceived gap in innovation, the payment methods available to small B2B companies were examined to identify key challenges and areas for future innovation in B2B payments. The research contains primary data from semi-structured telephone interviews with five owners or managers in SME (Small or Medium-Sized Enterprise) B2B companies, located in the United Kingdom. It will be concluded that the payment methods available to small businesses are sufficient for their needs, and there were no real ‘pain points’ with the actual payments themselves – and this is posited as one reason why payment services innovation has been limited within B2Bs. However, each business experienced a number of challenges in the bigger-picture payment cycle and business purchasing flow. It is within this space - helping businesses manage payments, not make payments - that opportunities for innovation lie, and a conceptualisation of new business opportunities is discussed.