Earlier in this series, we looked at recent rapid growth in online B2B marketplaces and their main sectoral focus. Now we look ahead to what happens next, from embedded finance and payments through to the impact of Open Banking and further digitalization…
Recent impressive growth in business-to-business (B2B) marketplaces is just the start of a revolution in how businesses procure goods and services – and how they pay for them. According to Straits Research,[1] the Total Addressable Market (TAM) for global B2B e-commerce is set to rise from $7.4 trillion in 2022 to more than $36 trillion by 2031. Using separate market sizing data from FXC Intelligence,[2] we estimate that B2B marketplaces will constitute just under half (49.2%) of all transactions between businesses by the early 2030s.
Growth of this magnitude – around 19.2% CAGR over the present decade, according to Straits Research – has serious implications for all players in this space, from marketplaces themselves through to their customers, partners, and suppliers – as well as the banks that serve this ecosystem. Alongside the organic growth that marketplaces are experiencing, continued digitalization in the overall economy during this period – as well as the wider adoption of Open Banking – are likely to drive a growing proportion of total B2B online turnover towards digital marketplaces over the next five years.
The Next Steps On The Journey To US$ 36 Trillion
The above factors – the drive towards Open Banking, ongoing digitalization in global SMEs and the advent of a more broadly digitalized economy – all serve to support longer-term growth in B2B marketplaces. However, in the near term we expect embedded payments and embedded finance to provide the most significant boost to growth.
As more businesses go online to purchase goods and services, pressure will grow for more efficient payment and procurement processes. And that pressure will encourage the adoption of embedded payments and finance, which drive efficiency by combining financial tasks such as payments, credit, cash advances, or invoicing with ordering to minimize user friction and maximize revenue opportunities for sellers.
One major attraction of embedded finance is that it involves fewer authentication requests, as the user combines – for instance – ordering with payment through a single authentication step. Embedded finance also gives merchants the ability to cross-sell products during the checkout process, and to acquire customer purchase data which can yield insights in functional areas such as marketing and product development to loan decisioning.
Source: Shopify
Analysis of the impacts of embedded finance suggests it has the potential to uplift revenues by up to 16% for marketplace sellers, while making ordering, payments, shipping, and other functions easier and simpler for marketplace users. As the graphic above shows, embedded finance can deliver revenue uplifts across Payments and Acceptance, Insurance, and Financing Solutions, with this latter category seeing the strongest improvements in revenue of up to 10%. A 2024 KoreFusion study across 20 countries in EMEA found the average lift revenue to be 5.92%. These revenue uplifts are achieved by reducing friction through fewer authentications, cutting the number of steps involved in selecting and ordering products and services, a faster and easier user experience, and realizing cross-selling opportunities during the ordering process. They also reduce the back-office costs and errors associated with traditional invoicing.
Source: KoreFusion analysis
The Next Wave: Open Banking And Ongoing Digitalization
As touched on earlier in this piece, we expect the positive effects of embedded finance and payments to be amplified by ongoing digitalization of the global SME segment and the proliferation of Open Banking services across more markets during the next five years.
By facilitating connectivity between banks and service providers, Open Banking can help add a range of functions to B2B marketplaces, empowering them to offer a range of services such as corporate lending, credit, insurance, and more. Open Banking will also enable credit and lending firms to gain much easier access to established credit records and purchasing histories from a user’s bank, something that would represent a huge improvement to existing loan decisioning processes. This model has already been successfully pioneered in markets as diverse as China and Nigeria, where lending firms combine user purchase histories and other information from banks with available credit history information to enable loan decisions.
The ongoing digitalization of the global economy will drive further growth in B2B marketplaces as more merchants go online. According to The Digital and Card Payment Yearbooks 2023-2024,[3] the number of merchants involved in digital payments is set to rise by 30% before the end of the decade. As more merchants digitalize, they are more likely to want to procure goods and services via online channels, and to favor electronic payment methods. According to a 2023 Global Data Survey of merchants, 25% of merchants worldwide prefer using e-wallets and mobile payments to cash, with a growing number (6%) preferring digital receipts to paper records.
We expect growth rates in B2B marketplaces to accelerate over the next five years as embedded finance and payments power up existing abundant growth. At the same time, the proliferation of Open Banking will enable marketplaces to offer more services to a growing body of digitally-engaged merchants who are increasingly favoring electronic payment methods and electronic receipts. In summary, we will see the creation of a virtuous circle in B2B marketplaces which will power prodigious rates of growth into the early years of the next decade.
Korefusion optimizes SME payments strategy across 80 countries. We help banks, brands, and fintechs develop embedded payment and financial services for SMEs. For more information, please contact hello@korefusion.com.
[1] Straits Research, 28 August 2024, “The B2B e-commerce market: market sizing” https://straitsresearch.com/report/b2b-ecommerce-market
[2] FXC Intelligence, 16 January 2025: “How big is the cross-border payments market? 2032’s $65tn TAM” https://www.fxcintel.com/research/reports/how-big-is-the-b2b-cross-border-payments-market
[3] See The Digital and Card Payment Yearbooks 2023-2024 at www.paymentyearbooks.com