How to choose a B2B Buy Now, Pay Later provider


The ability to provide flexible payment options to business customers should be a priority for online B2B marketplaces,e-commerce platforms and other sellers.

Even before the pandemic forced trade to go remote, millennials made up 73% of B2B buyers and were spearheading a growing demand and expectation for B2B transactions to replicate those in the B2C space. This means that buyers are looking for smooth, digital-first experiences and flexible payment options, including B2B Buy Now, Pay Later (BNPL) options at the checkout.

As Hokodo co-founder and co-CEO Richard Thornton explored in a past article, B2B payments are still decades behind consumer payments. Unlike in B2C, B2B merchants don’t have any good options to offer flexible credit or payment terms to their business customers online. As a result, they struggle with 20th-century credit management solutions including paper-based applications; manual credit checks; painful invoicing, chasing and cash reconciliation; and the costs of late payments and non-payments – the single biggest cause of business failure among SMEs.

That is, until Hokodo and other providers began to revolutionise B2B trade with innovative Buy Now, Pay Later solutions. But how do you choose a B2B Buy Now, Pay Later provider? What do you need to consider when offering flexible payment terms to business buyers?

These are questions that many businesses ask us, and as a leading facilitator of B2B credit solutions, we are well positioned to help you choose a Buy Now, Pay Later provider that is right for your business.

Key Considerations when Choosing a BNPL Provider

  • Offer rate
  • Tech performance
  • Ease of integration
  • Solution flexibility
  • Payment methods
  • Price
  • Collaborative approach
  • Risk platform
  • End-to-end capability
  • Other considerations
  • The risks of choosing the wrong BNPL solution
  • Evaluating and choosing a BNPL provider in 8 steps

When evaluating different BNPL technology providers, there are 9 key criteria that you need to consider.

1. Offer rate

One of the first things to consider when comparing different B2B Buy Now, Pay Later (BNPL) solution providers is the offer rate that said provider will be able to extend to your buyers. But before we cover the why, it’s important to understand the what. So, what exactly is the offer rate?

Put simply, the offer rate (a.k.a. acceptance rate) of a Buy Now, Pay Later scheme refers to the proportion of positive responses from your BNPL provider to requests for payment terms. For example, if your provider can offer deferred payment to 80 out of every 100 of your customers who request it, their BNPL solution has an offer rate of 80%.

Technically, the offer rate can be measured at transaction level (accepting 80 transactions out of 100), at customer level (offering payment terms to 80 customers out of 100) as well as GMV level (offering on £80 out of £100). All of these measures matter and track slightly different aspects of the offer rate performance. For instance, a provider that only extends small credit limits might be able to cover a majority of your buyers in number but not the top customers that account for the bulk of your business.

Offer rate is directly dependent on the ability of your Buy Now, Pay Later provider to offer credit terms instantly, even for first-time customers. A good provider will have processes in place which enable quick and responsive escalation for large or particularly sensitive cases, so that as many of your customers as possible can be offered the option to pay later.‍

Why does the offer rate matter?‍

The higher the offer rate, the more of your customers will be eligible for payment terms and the more you will benefit from your B2B Buy Now, Pay Later solution. We’re talking greater average order value, an uplift in conversion rate and increased purchase frequency.

To ensure that you pick the right BNPL solution, you need to understand the difference between a good provider and a poor one.

B2B Buy Now, Pay Later providers who are not technologically savvy or don’t have the right level of backing will likely extend a low offer rate of 70% or below, and even when they are able to extend payment terms, they won’t be able to offer in real time. Instead, customers will have to wait for a few minutes – which destroys your conversion rate – or worse still, fill out credit application forms. A slow escalation process and delayed response times are also telling signs of a below average BNPL solution provider.

If you partner with a company who matches the description above, you risk alienating your customers and losing them to a competitor who has integrated with a leading provider of B2B Buy Now, Pay Later services.

Leaders will likely be able to offer BNPL options to at least 80% of your customers in real time thanks to automated credit and fraud checks, sub-second answers, the ability to offer large credit limits when required and clear rejection codes. In rare occurrences when a real time decision cannot be made, your provider will be able to respond quickly and escalate the case appropriately, ensuring that as few customers as possible are lost to the competition.

2. Tech performance

Clearly, the high offer rate extended by leading B2B BNPL providers is partly dependent on their tech performance, but technology is such an important factor to evaluate when choosing a Buy Now, Pay Later solution that we consider it as a criterion all of its own.

Tech performance is a big topic in its own right, but there are two KPIs worth considering in particular: uptime and latency.

Uptime refers to the time a given tech solution is live for. How often will your BNPL provider pull their solution offline for scheduled maintenance? How often will it let you and your customers down without any warning?

Meanwhile, latency is the average time it takes for data to be transferred between your online store and your solution provider. In the context of B2B commerce, latency refers to how quickly your customers are offered their Buy Now, Pay Later options.‍

Why does tech performance matter?‍

Your site is live 24 hours a day, 7 days a week, and your customers could be transacting at any time, so you need a solution that supports you 24/7. Unfortunately, most incumbent solutions are not fit for digital commerce and they are prone to frequent crashes or being pulled offline for (un)planned maintenance. Uptime is important because if a customer reaches your checkout expecting the option to pay later only to be let down, they will find another supplier who meets their needs.

Latency matters because speed and efficiency are important to B2B buyers. The longer your customers have to wait for their payment terms, the worse their buying experience will be, which might put them off returning to your store the next time they need to make a purchase. Ultimately, high latency will negatively impact your conversion rates. A rule of thumb to go by is that every 100-millisecond delay in load time can hurt conversion rates by 7%.

Providers whose tech performance is not up to scratch will likely be those whose B2B BNPL solution was originally developed for offline trade and has since been shoehorned into a digital space without proper optimisation. Avoid such providers, as well as those with a reputation for frequent interruptions and downtime – planned or otherwise. If a prospective provider has latency of 1 second or more, steer clear.

Instead, seek out a B2B Buy Now, Pay Later provider whose solution supports frictionless online checkout. Modern architecture, built and optimised specifically for online commerce, should be high on your list of requirements. Leaders in this space will support you with ongoing performance monitoring and a highly reactive technical support team. Better still, look out for a provider that publishes a transparent dashboard that allows merchants to monitor uptime and latency of their BNPL solution.

3. Ease of integration

When deciding on which B2B BNPL provider to work with, it is vital to consider the ease of integration of their solution. This refers to how simple and quick it is to integrate the Buy Now, Pay Later solution into the checkout of your online platform. You’ve got a business to run, so the sooner you can start offering flexible payment terms to your customers the better.

Why does ease of integration matter?

If your tech team spends weeks poring over confusing API documents and slowly working out how to implement the BNPL solution into your checkout, you’re missing out on sales, new business and profit. On the other hand, if you opt to work with a leader in the space, you could be offering flexible payment terms to your customers and reaping the commercial benefits much sooner and without diverting precious tech resources to this integration.

How do you tell the difference between a provider who can offer an easy, streamlined software integration and one who will end up using too much of your time and resources?

Ask how long they anticipate integration to take. A poor to average provider will likely advise several weeks or months before your checkout is up and running with payment terms, or may be unable to give you a timeline at all. A leader in this space should be able to demonstrate a clear onboarding plan and implement their Buy Now, Pay Later solution within a few days or weeks, depending on the integration type. They’ll also respect your time and ensure to do the majority of the heavy lifting themselves.

It’s not only about speed and timings. A leading provider of B2B BNPL solutions will also prove their value with multiple staging environments or ‘sandboxes’ in which you can test the integration prior to release. This makes for a smooth and successful launch.

Look out for providers using a modern API design such as REST, and whose API documentation is clear, developer friendly and publicly available. Avoid low-end BNPL partners who use SOAP for their API architecture and accompany it with out-of-date developer guides.

Best practice providers will also offer native integrations and plug-ins for the most widely used e-commerce platforms such as Magento and Shopify.

Your assessment of B2B Buy Now, Pay Later providers should also take into account any available developer support. Do you have live access to engineers via a Slack channel, for example? Will your new partner provide software development kits (SDK) and iFrames? Ultimately, a reliable and technically strong provider like Hokodo will have the capacity and capability to support your store and developers throughout the lifetime of your partnership – even if you change your CMS or want to make changes to your customer journey.

4. Solution flexibility

When we speak to prospective customers, one of their biggest concerns is whether a B2B Buy Now, Pay Later solution will have enough flexibility to fit the unique needs of their business. 

Depending on the individual characteristics of your platform, you might be looking to work with a provider who:

  • Has easy to adapt underwriting rules and footprint.
  • Can deal with limited companies as well as sole traders.
  • Offers BNPL solutions for online, phone and/or PoS.
  • Can extend various payment terms such as 30, 60 and 90 days.
  • Leverages payment experience data to increase credit limits over time.
  • Offers a multi-currency or multi-language solution.
  • Displays credit scores and limits to customers.

Why does solution flexibility matter?

High configurability of your provider’s technology and platform lets you adapt the Buy Now, Pay Later solution to your needs and to the specificities of your sector. Most importantly, you will be able to give your customers what they need and what they expect from a B2B purchasing platform.

Telling the difference between a provider who offers a highly flexible solution and one who doesn’t is easy enough – you just need to ask. Poor providers will present you with a one-size fits all solution not optimised for your niche, while leaders in the B2B BNPL space will go the extra mile to understand your business and design the optimal solution.

5. Payment methods

When we talk about payment methods (or settlement methods) we are referring to all the different ways that customers can choose to pay when settling any outstanding charges in line with their payment terms. This criterion might seem obvious, but it’s essential that the B2B BNPL solution provider you choose offers your customers a variety of the most appropriate B2B payment methods.

Payment methods include credit card, bank transfer, direct debit, mobile payments, Skonto, iDEAL and more.

Why do payment methods matter?

Put yourself in the shoes of a buyer. You land on the homepage of a purchasing platform, navigate to the products you need, fill your basket, click through to the checkout and choose to buy now, pay later only to find that your preferred settlement method is not listed. At this point there’s a good chance your customer will abandon their cart and take their business to a competitor whose BNPL provider offers the right payment method.

But what exactly is “the right payment method”? The most convenient method varies depending on factors including but not limited to:

  • Order value
  • Frequency of purchase
  • Industry
  • Geographic location

If you partner with a leading B2B Buy Now, Pay Later solution provider, your customers won’t face the challenge described above. Instead, your partner will work with you to understand the most convenient B2B payment methods and then present a selection of options that is comprehensive but doesn’t overwhelm the end customer. This will help to drive optimal conversion rates and improve the user experience of your checkout.

Beware of BNPL platforms coming from the world of B2C whose solutions often rely heavily on credit cards as a payment method. This won’t work for your B2B platform as basket values often exceed standard credit card limits and business buyers are, understandably, unwilling to use their personal cards for professional procurement.

6. Price

The overall price of your new B2B Buy Now, Pay Later solution will influence your decision on which provider to partner with. You’ll need to consider the cost of the solution in comparison with the value it creates for you and your customers. A high quality solution worth its price tag will:

  • Boost revenue through improved average order value (AOV), increased conversion rates and an uplift in order frequency.
  • Not require any additional or unexpected payment processing fees.
  • Offer risk protection in case of buyer insolvency, protracted default, fraud, chargeback or any other default on payment.

Why does price matter?

You want clarity on your business case and to be in a position to compare cost against value. The price of many solutions is bloated by setup costs, late penalty fees, rolling reserves, clawbacks in case of non-payments and more, which can make it difficult to understand and compare with that of competing providers.

You also want a fee structure that aligns your interests with those of your provider. Market leading B2B Buy Now, Pay Later providers understand this and work with you transparently to come to an agreement.

You’ll know when you’re dealing with a leading provider because they will articulate a clear and specific business case that is adapted to your requirements, taking into account the overall price, payment terms offered, offer rate and the benefits you will experience. There shouldn’t be a lock-in period or any setup costs with a provider like this. Ultimately, you should be presented with a pricing structure that aligns all parties and stipulates the ROI of your new solution.

At the other end of the spectrum, ill-equipped providers will likely present you with a price that doesn’t take into account the specifics of the deal and how the BNPL solution will impact your business. You’ll be able to spot these providers when they make opaque offers or quotations that don’t refer to the associated offer rate. In fact, we frequently meet merchants who went for a cheaper solution without realising that this came at the expense of the offer rate, thereby penalising conversions. How frustrating it is when you find out that your provider doesn’t cover your best customers – the ones who most deserve longer payment terms! 

7. Collaborative approach

Successful relationships between payment services providers and B2B sellers are built on collaboration and cooperation, but what does a collaborative approach look like in the context of B2B Buy Now, Pay Later?

In order to achieve the best customer outcomes, you need a provider willing to share vital commercial information such as:

  • Customer credit scores to support your own prospecting & KYB efforts.
  • Transparent rejection reasons when a customer cannot be approved for credit.
  • Ongoing monitoring of offer rate and take-up rate.

Ultimately, you’ll be looking for a provider with the ability to co-design with you the best solution for your business – a partner with appointed resources to manage the partnership both commercially and technically.

Why does a collaborative approach matter?

A/B testing drives the best results when it comes to commerce, but without collaboration from your B2B Buy Now, Pay Later solution provider, you’ll only ever have part of the picture. By working together you will gain deeper, holistic insights about your customers and how they interact with the payment terms extended by your partner.

We recommend avoiding providers who appear unable to leverage any lessons learned from analysing their solution’s performance and whose limited tech capabilities prevent ongoing tweaks and adjustments to your Buy Now, Pay Later offering. Providers without a product approach or a partnership mindset will ultimately be unable to provide the level of collaboration you need in order to maximise the benefits of extending payment terms to business customers online.

Instead, opt for a provider not only willing to collect data and share insights but one who does this as standard practice. This kind of collaborative approach will benefit both parties when it comes to making changes to payment terms, adapting underwriting rules or any other refinements your solution requires over time. A leading Buy Now, Pay Later provider will take an iterative approach to deliver the best offer and conversion rates over time, so this is something that you really want to get right.

8. Risk platform

In order to protect your business you need to be certain that the BNPL provider you partner with offers effective risk protection and is backed by reputable insurers and/or financiers. Having this safety net in place will mean you don’t need to worry about getting paid or chasing debt, leaving you to focus on what’s most important – achieving business growth goals.

Although we talk about risk platform as a single criterion, it can be broken down into a handful of more manageable pieces:

  • The sustainability of your provider’s offer rate.
  • The sophistication of their underwriting model.
  • The ability of your BNPL provider to take on large exposures (a.k.a. their financing and insurance capacity).
  • The effectiveness of their credit and fraud risk controls.

Why does the risk platform matter?

A B2B Buy Now, Pay Later provider with weak risk management practices could leave your platform susceptible to fraudsters, which can lead to your business losing money or even failing entirely. When assessing potential partners, you want to be sure that any shortlisted providers offer effective risk protection and are backed by reputable insurers and/or financiers.

How can you tell if a B2B BNPL solution provider will protect your business from risk? For the sake of safeguarding your business, steer well clear of any provider where you suspect weak fraud and credit risk controls. Of course, a potential partner is unlikely to admit this up front, but key indicators might include: 

  • Traditional credit risk underwriting hindered by a weak data platform.
  • Frequent shifts in offer rate caused by knee-jerk underwriting stance.
  • Limited track record in B2B underwriting.
  • A lot of small print clauses (“exclusions”) limiting the cases in which you’ll be protected against non-payment. For instance, some providers may protect you against insolvencies but not against chargebacks (a.k.a. “friendly fraud”).

Conversely, an ideal partner will be one who leverages experience and data to refine their underwriting rules and optimise their footprint, thereby minimising risk.

They will also be able to demonstrate solid financial backing from a reputable insurer or financier. For example, Hokodo is backed by Lloyd’s of London, so all merchants using our solution trade with peace of mind knowing they are fully protected against non-payments. This also provides us with stable insurance capacity, allowing us to take on large exposures.

9. End-to-end capability

An end-to-end BNPL solution is one that incorporates all elements of the order-to-cash lifecycle.

A wheel shows the 6 elements of trade credit management: credit scoring, fraud checks, payment processing, financing, insurance and collections.

Why does end-to-end capability matter?

The benefits of partnering with a provider who offers an end-to-end BNPL solution cannot be overstated.

An end-to-end solution is one which relies as little as possible on third parties. For example, Hokodo’s solutions are underwritten by SCOR Syndicate 2015, SCOR SE’s corporate syndicate at Lloyd’s of London. However, we have built an in-house data & credit scoring platform that serves as the foundation of our proprietary underwriting engine. This allows us to make faster decisions and offer credit to a larger pool of buyers than if we relied on a larger insurer for our lending decisions.

Meanwhile, businesses such as invoice insurers or factoring companies offer part of the credit management process, but not the entire journey. This means that you’ll be left trying to tie together multiple solutions, chasing several partners and dealing with far more admin than necessary.

Look for a partner to whom you can outsource the entire order-to-cash journey, and you will benefit from a higher offer rate, faster credit decisions for your buyers and quicker fixes if something goes wrong.

Other considerations

In addition to the 9 non-negotiables you should consider when choosing a B2B Buy Now, Pay Later that are listed above (and in this handy ebook), it’s important to carefully review the terms and conditions of your new solution and look into the reputation of the BNPL platform. We also recommend ensuring that the solution and provider are compatible with your own business.

Terms and conditions of the BNPL solution

The terms and conditions (T&Cs) of your B2B Buy Now, Pay Later solution will stipulate the legal contract between you and your provider. Put simply, they are the conditions on which you agree to do business with one another. It’s essential that you read and understand the terms and conditions of any B2B BNPL solution that you choose to implement, because they include key details that impact you and your buyers.

The T&Cs will lay out repayment terms and provide details about late fees, interest rates and other charges. Look out for information about eligibility criteria, dispute resolution processes and liability for fraudulent transactions. Information about privacy and data protection should be included, as should details about the consequences of non-compliance with the T&Cs.

Compatibility with your business model

There are a few things to consider when it comes to assessing the compatibility of a B2B BNPL solution with your business model.

  1. Product or service compatibility. Critically, is the solution itself suitable for its intended purpose? 
  2. Industry compatibility. Do buyers in your industry have any niche expectations when it comes to payments?
  3. Business size and scale. Is the provider going to be able to provide the right support as your business grows?
  4. Ways of working. Does the provider operate, communicate and manage the relationship in a way that suits your business?

The reputation of your B2B BNPL provider

When making any significant purchase or investment in your personal life, you likely take the time to look at the reviews and ratings of your fellow customers. Why should choosing a BNPL platform for your business be any different?

Before committing to a provider, read up on what it’s really like to work with them by checking their reputation on G2, Capterra, Google or Trustpilot. A minority of bad reviews may not be an issue, but proceed with caution if the BNPL provider has consistently poor ratings.

The risks of choosing the wrong BNPL solution

Choosing the wrong B2B BNPL provider carries a set of risks that have the potential to delay integration at best and cause serious financial issues at worst. Be vigilant and meticulous when assessing providers to protect your business from these risks.

Financial loss

Working with an unreliable or financially unstable BNPL provider can expose your business to financial risks. For instance, if the provider fails to remit payments to your business on time or goes bankrupt, you may face cash flow problems or even significant losses.

Integration issues

Inefficient or incompatible integration with your existing checkout can lead to operational challenges. This may include difficulties in syncing inventory, processing orders or reconciling payments, resulting in administrative headaches and potential disruptions to your business operations.

Customer dissatisfaction

Choosing a BNPL provider that offers subpar services or lacks reliable customer support can result in a poor experience for your customers. Issues like delayed or inaccurate billing, payment processing errors or unresolved disputes can lead to customer dissatisfaction and harm your own reputation as a seller.

Limited scalability

Different BNPL providers offer varying features, terms and conditions. Choosing a provider with limited functionality may restrict your ability to customise or scale the payment options according to your business needs. It can also hinder your ability to adapt to changing customer preferences or market dynamics, potentially hampering your competitiveness.

Data protection and compliance

BNPL transactions involve sensitive customer data, including business and financial information. Selecting a provider with inadequate security measures or poor data handling practices can expose your business and customers to the risk of data breaches, identity theft, or fraud. Additionally, if the provider fails to comply with relevant data protection regulations, your business may face legal and regulatory consequences.

Negative impact on conversion rates

If the provider you choose has complex or cumbersome checkout processes, it can negatively affect your conversion rates. Lengthy or confusing payment procedures may discourage potential customers from completing their purchases, leading to lost sales opportunities and reduced revenue.

Evaluating and choosing a BNPL provider in 8 steps

  1. Identify your business needs

Begin by understanding your specific requirements and goals. Consider factors such as your target market, industry, average order value, customer preferences and integration capabilities with your existing systems. Determine the key features and functionality you expect from a provider to meet your business needs effectively.

  1. Research and shortlist providers

Identify reputable BNPL providers that align with your requirements. Look for providers that have a strong track record, good customer reviews, and positive industry reputation. Consider factors such as the provider's stability, experience, range of services, fees and charges, customer support and security measures.

  1. Evaluate provider features and terms

Assess the solutions offered by each provider. Compare aspects such as payment options, repayment periods, interest rates (if any), transaction fees, integration options, reporting capabilities and customisation possibilities. Ensure that the provider's offering is flexible and scalable to accommodate your business's growth and evolving needs.

  1. Assess customer experience

Consider the end-user experience. Evaluate the ease of use, simplicity of the checkout process, mobile-friendliness and accessibility of the BNPL technology. Look for customer-friendly features like pre-approval checks, transparent terms, and intuitive user interfaces that enhance the overall shopping experience.

  1. Review customer support and dispute resolution

Look into the level of customer support provided by each BNPL provider. Consider factors such as response time, availability of support channels and the provider's reputation for effectively resolving customer issues.

  1. Consider security and compliance

Assess the security measures implemented by each BNPL provider, such as encryption protocols, PCI compliance and secure data storage practices. Ensure the provider adheres to relevant privacy and data protection regulations to protect both your business and your customers.

  1. Cost analysis

Evaluate the pricing structure of each BNPL provider. Consider factors such as setup fees, transaction fees, revenue share models and any additional costs associated with integrating or maintaining the service. Compare these costs against features like offer rate and potential benefits, such as increased conversion rates, average order value and customer loyalty, to determine the value each provider offers.

  1. Make an informed decision

Discuss the evaluation of the above factors with your colleagues and select the BNPL provider that best aligns with your business requirements, customer expectations and long-term goals. Take into account the provider's reliability, reputation, compatibility with your systems, and the overall value they can bring to your business. To help you make an informed decision on the cost and revenue benefits associated with offering BNPL, we have built a Trade Credit cost calculator to help you calculate the return on investment (ROI) you can expect from such a solution. Try it out now.

Next steps

We hope this comprehensive guide on how to choose a B2B Buy Now, Pay Later provider has been helpful in making the best decision for your business. Want to find out more about how to choose the right BNPL provider for your B2B platform? Chat with one of our payments specialists today.

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