The Merits of using Crypto for B2B Transactions

Apr 21, 2022 by Sage Thee

As we see more and more companies accepting crypto for payments in the B2C space — such as Microsoft, MasterCard, and even Starbucks — we can’t help but wonder what crypto might look like in the B2B space. While the acceptance and use of crypto for B2C transactions is monumental, we think that it can be even better — i.e., crypto being widely accepted and used in B2B Payments.

Nudge in the Right Direction

Many companies are already utilizing aspects of crypto for their B2B transactions — like blockchain, decentralized ledgers, and real-time fund verification inspired by that of cryptocurrency transactions — but the funds themselves are not wholly digital currency. At Paystand, we can’t help but ask what would it look like if more companies traded crypto instead of cold hard cash?

You’re probably no stranger to exorbitant processing fees, chargebacks, and manual reconciliation. Digitizing your AR and AP processes can do wonders to speed up your time to cash and mitigate the hassle and headache associated with reconciliation. Cryptocurrency, in addition to digitizing your payments processes, can make the whole process even more seamless, speedy, and secure.

Pros and Cons

The pros of utilizing crypto for B2B payments vastly outweigh the cons. First, using crypto in your B2B transactions provides a speedy, cost-effective route to get paid quickly and securely. While banks can take up to five business days to process transactions, blockchain cuts central banks out of the process, and the around-the-clock network is available to support real-time to next-day transactions.

In addition, Crypto is much more convenient than typical money transfers. Instead of sending an invoice, hoping the customer provides accurate banking details, and waiting days for payment, with crypto, you can transfer funds instantly, knowing they are safe and secure in the immutable blockchain.

The cons? Aside from pushback from your client base and employees, the main worries are the potential instability of the cryptocurrency market-disrupting business operations, ease of use, the security of digital currencies, and the fear of regulation further disrupting the flow of cash.

Most of these fears are proving to be unfounded, however. 81 of the top 100 companies are already using blockchain technology, and PayPal and Microsoft are among the 10 major companies that accept Bitcoin. Digitizing payment processes using blockchain technology has proven to decrease DSO with faster, safer transactions — and crypto and the blockchain go hand in hand.

Analysts with Allied Market Research project that the global cryptocurrency market will more than triple by 2030, with the market reaching nearly $5 billion, and financial experts posit that investors, businesses, and brands will not be able to avoid the rising tide of crypto for very long. Therefore, businesses' wisest course of action may be to get ahead of the curve with crypto before it becomes an unavoidable fact.

Case-by-case Basis

Ultimately, utilizing crypto for B2B transactions is conditional. What works for one business may not work for another, or even transaction to transaction — but it is crucial to provide the option for your customers to pay in crypto to keep up with the ever-evolving demands of the financial market.

For example, some of your vendors may staunchly stick to their paper payment options, fully resisting any digitization attempts. On the other hand, you may well have vendors who jump for joy at the option of trading crypto for their goods and services. Maybe you have vendors whose schedules do not run on the same schedule as the banks, or their AP department is overloaded, or any myriad of factors that contribute to your payments being delayed — with crypto, the transaction requires nothing more than a tap of a button or two and the currency is traded, at any time (not within normal business hours).

Think of crypto as just another avenue for payment, such as a credit card or a bank transfer. Accepting credit cards and bank transfers already decreases the time to cash and makes payments easier for your clients, and utilizing crypto would just enhance that further.

Looking to the future

We can expect the tide to continue to turn in favor of crypto, with more and more businesses incorporating digital currencies into their financial strategies. For example, PYMNT’s report The Strategic Role of the CFO shows that 93% of U.S. CFOs are in the process of digitizing their accounting operations. 96% of those CFOs say they are digitizing for the benefit of their vendors and customers.

With an increasing demand for digital payment options and the continued rise of cryptocurrency use, businesses may need to consider utilizing cryptocurrency in their payments processes to stay ahead in an aggressive and growing market.

Read our blog post on 7 B2B DeFi use cases to learn more about crypto in the B2B space.