Optimizing B2B Payments Decisions Via B2C Payments Data

The companies that have disrupted small businesses’ front office by developing technology at the point of sale have more opportunities than with just B2C transacting. The data streaming into their systems at the POS can offer an accurate, real-time picture into the financial health of small business clients, and that insight can be critical for other services in the back office.

Square and PayPal are some of the biggest POS players that laid the groundwork for this trend. Data at the point of sale has allowed Square Capital to take off, mitigating loan risk by incorporating transaction information in its assessment of borrowers. PayPal, meanwhile, is also introducing a slew of back-office solutions, armed with troves of financial data from its SME clients.

One of the latest companies to follow in this path is Revel Systems. The company offers businesses a POS on the iPad, but earlier this month, the firm announced plans to up its presence in the back office, too.

“Business owners want a pulse on their business, whether they are in or out of store,” explained Revel Systems Chief Operations Officer Bobby Marhamat in an interview with PYMNTS. To offer SMEs that pulse, Revel launched Insights by Revel, using the data from transactions at its iPad POS to assess where a business is at financially.

But taking advantage of B2C transactions at the front can lead to more insight than simply cash-in, cash-out, Marhamat explained.

“Electronic payments are able to be tracked, and business owners can use this information to identify customer behavior and build a more strategic plan,” the COO said, adding that the rise in electronic payments in the world of B2C commerce means easier access to critical data.

In an announcement of Insights by Revel, Revel Systems Cofounder and CTO Chris Ciabarra explained how that information can be used strategically.

“Owners and managers can oversee labor remotely and even detect who worked overtime, who missed a shift and solve the problem immediately, managing overall cost,” he stated.

There is a trickle-down effect from the front office to the back when it comes to use cases for POS data. Revel’s Marhamat pointed to the potential for this type of information to impact B2B payments for small business users, for instance.

“It will shape the way business owners interact with their suppliers because they will now have more control over product needs, never having to worry about overstocking or not having enough of a particular item,” he said. Further, the COO noted, Revel will be looking to develop its own data platform and explore other use cases for this analysis in the future.

While SMEs may have an opportunity to gain new insight into their operations that was previously far less accessible, small businesses are catching onto POS data’s potential, including for B2B transacting purposes.

A new report from Askuity, released last week, found that 77 percent of brands that sell in at least one national retailer say they believe they could be doing more with their own POS data to improve their business. The data suggests retailers are seeking POS data to understand how they should deal with their business partners, and already, researchers found, these companies are largely taking advantage of insight from the point of sale.

“On average, 65 percent of brands are actively using POS data today, and that’s actually quite encouraging and exciting,” stated Askuity Head of Marketing Victor Coscarella in a recent webinar, reports by RetailWire said. “If we were to do this 10 years ago, we imagine that this number would be far lower. It would even be below 50 percent.”

The potential for POS data is vast, and there is still room for businesses to grow when it comes to taking advantage of their own data. Askuity’s research found 28 percent of businesses aren’t using POS data at all — even though that data is often offered for free. Part of the issue, the report concluded, is that businesses don’t know what to do with that data once they have it: Poor data quality, an undefined strategy for what to do with POS data and a lack of analytics expertise are all major barriers to making use of this information.

But as more POS technology players like Revel, Square and PayPal solve those issues for their business clients, the list of use cases for the potential of POS data grows. Askuity found that more than half of survey respondents would like to use that insight for product performance tracking, promotions and merchandise assortment. But there are also major opportunities for B2C transaction data to impact the B2B world: Inventory management and strengthening relationships between brand suppliers and retail buyers are also on companies’ horizons.