Buy now, pay later has been a success in the consumer arena, but can the same option work for business payments? Alibaba is betting that it will, partnering with Slope on “Pay Later for Business,” an embedded financing solution that lets U.S. business buyers manage payments in much the same way they do at retail checkout.
The offering will allow qualified business buyers to apply for installment terms on purchases. Behind the scenes, Slope provides the lending, underwriting, and collections infrastructure, using artificial intelligence to help assess credit and manage risk for B2B platforms.
The partnership with Alibaba marks a step toward wider adoption of BNPL in the business space, and Slope notes it expects to announce additional collaborations later this year.
Targeting Mom-and-Pop Businesses
Although Alibaba has more than 130 million users worldwide, fewer than 10 million are in the U.S. To drive growth, the company has focused on smaller mom-and-pop businesses in the U.S.
Demand for B2B financing in the small business segment remains strong, particularly for solutions that go beyond traditional card payments. After the 2008 financial crisis, banks largely shifted their small business lending to card-based products. Since then, fintechs have demonstrated that many business financing needs can’t be met solely through card offerings, creating opportunities for more flexible solutions.
The Promise of Embedded Payments
Merchants are eager for embedded payment systems that centralize and manage data from a single hub. Javelin Strategy & Research reported last year that nearly half of all merchants surveyed now obtain their payment accounts from providers other than banks. One reason for that is smaller B2B businesses can expand their market reach by offering more flexible payment options.
“Embedded finance means presenting the product at the right time in the buyer’s journey that will deliver the highest acceptance rates,” said Don Apgar, Director of Javelin’s Merchant Payments Practice. “Consumer-facing BNPL products are a great example of this. Offering a BNPL product on the checkout page offers little value to the merchant because at that point the consumer has already made their purchase decision and is now selecting a payment option. Where BNPL delivers growth for the merchant is on the product page because it shows the consumer how they can afford the product if they decide to buy it.
“This is what Slope is doing in this partnership with Alibaba,” he said. “It’s a great example of how fintechs are building on the promise of embedded finance.”
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