Video: Dynamic Discounting Levels B2B Playing Field

We at TSYS® are often asked about our point of view on the latest trends in B2B payments.  

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Dynamic Discounting Levels B2B Playing Field

May 19, 2017

Video: Dynamic Discounting Levels B2B Playing Field

We at TSYS® are often asked about our point of view on the latest trends in B2B payments.  Our clients ask us, "Is it really possible to both reduce the cost of card-based transactions and improve relationships in this space?" We believe it is due to a new alternative to the B2B interchange model makes this win-win scenario for buyers and suppliers a reality.

This takes place in the form of dynamic discounting, which allows flexibility for suppliers and buyers to discount certain transactions. This ability provides an incentive to move commercial payments from traditional, inefficient and costly paper processes to more modern, electronic payables.

As a bit of background: Each and every buyer-supplier relationship is unique and has its own trade terms. The key to greater ePayables adoption within the B2B payment space can be linked to assigning transaction rates based on a variety of complex relationships and factors like: number of days passed since invoice presentment, transaction volume, transaction size and the unique relationship between a buyer and supplier.

Dynamic discounting considers all of these factors and allows flexibility for buyers and suppliers to navigate trade terms together. Other benefits?

  • Buyers and suppliers define and customize rates using an issuer’s platform.
  • Suppliers can negotiate terms.
  • It opens new channels for ePayables acceptance.
  • It frees up current manual processes, reducing reconciliation and research.
  • It restores relationships between buyers and suppliers.

One of the most significant improvements this can make to the B2B payments landscape is simply that it levels the playing field between buyers and suppliers. Innovation and technology have naturally driven value to issuers, buyers and acquirers. Dynamic discounting moves the needle more toward the middle, allowing suppliers to have greater control over the model.

The main obstacle in the past for suppliers in transitioning to ePayables has been increased cost. However, now that they have a greater ability to negotiate trade terms, more suppliers are willing to participate. This increased supplier participation not only shifts the entire model into greater growth and innovation, but it also strengthens the relationships between buyers and suppliers – which have historically been the cornerstone of B2B commerce.

And this is just the beginning. All signs point to suppliers having a much larger say in the B2B commerce environment. Dynamic discounting is definitely a step in this direction, but the entire business model will have to accommodate this shift to garner success in the future.

Interested in learning more?