Here are some pointers that will help you get started in the B2B payments space. Let us understand the market size: $600 billion (for remittances) vs 140,000 billion (for B2B).
The market is huge. In remittances there are about 6,000-8,500 money transfer players, in B2B, the number is about 400-500 players. In both instances am not taking into account the number of banks that are in this business.
- Unlike the person to person transfer business where the margins are high between 1% and 2%, in the business to business payments arena it is very competitive. At best you would make half a percent and in many cases a quarter a percent so be very cognizant of the margins before you enter the business.
- Don’t enter the market directly by starting your own B2B payments company. Instead, try to partner up with someone and see if you have the sales capability to actually drive business, meaning, determine if you have the capability to bring business in and service it once you have figured this out, that you can do this for a good 6 months then perhaps it is time to start thinking about doing your own setup. Make sure your partnership is structured as such so that the clients know that you’re working with multiple providers and that you have ownership of the client. So tomorrow when you start your own business you can take your clients work with you rather than them being stuck in a contract with the provider you had originally placed them with.
- Find a niche to work in. It is a very important that you find a very focused area in which you will specialize in. B2B is so so big. You have to specialize in something this could be transportation, entertainment, logistics, travel, pharmaceutical, shipping industry, etc. There are so so many areas that you can look into. Go into an area that you understand or you think you can understand well and then start finding out how you can start getting businesses to trust you with their B2B payments for cross-border.
- Study the area you want to enter into a rather study the vertical you want to service. If you’re going to be servicing the hotel industry then study the hotel industry find out where the conferences are happening to find out everything about the, you know, supply and demand and the logistics and how vendors are paid what the payment conditions are which countries do payments how who the major providers are. Do your background research have ample of data and understanding on the competition, the routes, the countries, the originating countries, the terminating countries, the service providers, the numbers, and mechanics being currently used, and where the opportunity lies in. The more research you do the better informed you will be and especially learn the lingua franca. Every industry has a specific understanding of how certain terminologies and things are spoken, and if you can speak the language you can get the business.
- No deal is too small when you’re starting out. People will not immediately trust you with the $50,000 invoices for payments into China. What have to do is to start small. So if someone wants you to work with them for a $750 payment, take it! If someone wants you to work with that $600 payment, take it!
The goal is to keep learning in the first two or three months you will learn you will understand how much time you’re investing you’ll understand the mechanics you will understand what portion takes most of your time and resources what portion does not take more so take anything that comes your way as you go along then you will start setting minimums. Then you say you know the minimum size of an order I will execute is $2,500 or I will do $10,000 or I will do so much and so forth so right now at the starting phase take anything that comes your way.
This page was last updated on March 2, 2020.