Page 307 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

4 Benefits of B2B payments: Small suppliers

Digital B2B payments could also have benefits for small suppliers. Common examples of small suppliers in poor
countries are independent contractors who supply labour to larger companies. Other examples could include
artisanal manufacturers or small wholesalers. Benefits could include:

• faster payments, and, as a result, less cash flow anxiety;

• improved security as a result of avoiding cash;
• more customers by meeting the needs of buyers that prefer to pay digitally or for whom cash payment
is inconvenient;
• credit and digital history.
Faster payments:

Every supplier wants to get paid as fast as possible. The faster a supplier can be paid, the more working capital
that supplier has on hand to conduct business. Digital money offers immediate transfers. If the supplier
currently accepts checks, digital payments would eliminate the need to go to the bank and stand in line to cash
the check. If the payments were in cash, digital tools would obviate the need to transport the cash between
buyer and supplier.

Cash delivery usually takes three or four days, according to Oxigen. A banker’s check or a draft would still
take two or three days for suppliers to receive their payments. Payments through digital money can be made
instantly. 16

Improved security:

Faster payments also allow better security and cash management for the supplier. With wallet-to-wallet
transactions, there is no chance that the payment will get lost in transit. With fewer opportunities for payments
to get lost, digital payments could give suppliers the transparency and security needed to delegate payments
to employees. Or, they could accept payments remotely, without the need to make the deliveries themselves.

Relationship management:

Much like buyers, digital B2B payment tools could help suppliers manage relationships better. The mobile
payments firm Beyonic allows companies to both send and receive payments on the platform and save the
digital history. This allows small suppliers to track incoming payments and better manage relationships with
buyers.
This relationship management would also allow suppliers an easier time following up on unpaid invoices. When
payments are made in cash, it is difficult to know which invoices have been paid and which are outstanding.
A digital invoicing system would allow suppliers to know exactly when invoices are paid, and which invoices
demand follow up.

Gain customers:

For small suppliers, the ability to accept payments digitally could actually increase the customer base. The
company PayMate, for example, touts its ability to help businesses accept payments from anywhere in India.
17
This would allow a company to expand its geographic reach and gain more customers.

Another example comes from Copia Global. The company is able to deliver “Right to the village. No address, no
18
problem. Like FedEx, but better.” The business, enabled by digital payments, offers delivery to urban locations
within 48 hours and to rural locations within a week.

16 Based on an interview with Rajpal Duggal, Head of Group strategy and corporate planning at oxigen.
17 Paymate: http:// www. gopaymate. com/ .
18 Copia global: http:// www. copiaglobal. com/ .

279