In-house vs. outsourced BNPL: making the right choice for your B2B business

As a B2B merchant, you're always looking for ways to provide flexibility and value to your customers, and Buy Now, Pay Later (BNPL) is one of the most effective tools to do just that. However, the big question remains: should you build your BNPL solution in-house or partner with a specialized provider? The answer depends on your company’s resources, goals, and readiness to manage the risks and complexities involved in offering a BNPL solution. Let’s dive deeper into the factors that will help you decide which option makes the most sense for your business.

Introduction

In the fast-paced world of B2B eCommerce, offering payment flexibility has become a game-changer. BNPL allows customers to defer payments while merchants still receive funds immediately, improving cash flow and boosting sales. But when it comes to implementing BNPL, the big decision lies in whether to develop an in-house solution or outsource it to a trusted provider. The choice significantly impacts your business, from managing credit risk to offering a seamless customer experience. Let’s explore the key factors that can help you make an informed decision.

Why Offer BNPL in B2B eCommerce?

BNPL has evolved from a consumer-focused trend to a major feature in B2B transactions, offering several business advantages:

• Increase conversion rates: Offering flexible payment terms helps close deals with larger order values.
• Improve cash flow: Sellers get paid upfront while buyers can spread their payments over time.
• Reduce cart abandonment: BNPL provides a smoother checkout process, decreasing drop-off rates.
• Attract new customers: By offering payment flexibility, you broaden your customer base and foster loyalty.

According to statistics, BNPL can boost sales by as much as 30%, with many businesses seeing improved conversion rates when offering flexible payment terms. Moreover, businesses can leverage BNPL to overcome traditional trade credit limitations, providing faster payment approvals and streamlined purchasing processes.

Core requirements for running a BNPL program

Whether building an in-house BNPL system or collaborating with a third-party provider, several essential elements are key to an effective BNPL program. Here’s a closer look at the core components and why outsourcing may be the more strategic choice.

1. Credit risk automation and compliance management

• In-house challenge: Running credit risk assessments and maintaining compliance with regulatory standards can be exceptionally difficult in-house. Building an automated credit risk system requires access to up-to-date credit databases and expertise in financial analysis—a costly endeavor.
• Outsourced advantage: Providers like PastPay offer fully automated credit risk and compliance management as part of their core service. Equipped with AI-driven technology and experienced compliance teams, PastPay helps ensure all regulatory requirements are met, reducing the financial and operational strain on your business.

2. Resources required for program management

• In-house challenge: Managing a BNPL program in-house demands extensive resources. This includes the collection and management of invoices, legal fees, payment processing, and customer service—all of which add up quickly. Setting up internal teams and software is not only costly but also time-consuming.
• Outsourced advantage: With a provider like PastPay, the administrative burdens are handled by the provider. They manage the invoice collections, handle legal compliance, and provide customer support, allowing your internal team to stay focused on core business goals rather than backend operations.

‍

3. Capital requirements and cash flow management

• In-house challenge: Financing BNPL transactions requires significant capital investment, tying up funds that could be directed toward other growth initiatives. For businesses, using internal capital to finance customer purchases limits liquidity and slows the ability to reinvest in business expansion.
• Outsourced advantage: Partnering with a BNPL provider like PastPay enables businesses to leverage external funding sources for BNPL purchases, preserving cash flow. This approach supports quicker turnover and greater liquidity, enabling businesses to grow faster by reinvesting their own capital rather than using it to fund customer transactions.

‍

Should you develop BNPL in-house or use an external provider?

‍

The case for an in-house solution

Developing an in-house BNPL system can be attractive for businesses that prioritize control over their processes and want to tailor every aspect of their BNPL offering. The key benefits of managing BNPL internally include:

• Customization: By creating an in-house BNPL program, you can design it to fit your business needs and adjust terms for different customer segments.
• Data ownership: You retain full control of customer data, providing deeper insights into customer behavior, which can inform future marketing strategies.
• Long-term savings: Although the upfront investment is higher, large businesses may find that an in-house system reduces costs over time, avoiding third-party fees.

‍

Challenges:

• Complexity: Managing BNPL in-house is resource-intensive. It involves continuously monitoring credit risk, managing fraud, ensuring compliance, and overseeing collections.
• Scalability issues: Scaling an in-house BNPL program requires merchants to rely heavily on their own financial capital for customer financing, alongside managing unpaid invoices and conducting risk assessments. This approach is not only capital-intensive but also demands substantial ongoing resources and infrastructure updates, making it costly in both time and money.
• High initial investment: Developing in-house technology requires significant financial outlay, including hiring experts and investing in software and tools.

The case for using an external provider

Outsourcing BNPL to a provider like PastPay offers several advantages, particularly for businesses that want to get started quickly and minimize operational overhead. The benefits include:

• Cost efficiency: Outsourcing eliminates the need for upfront technology investment and specialist hires, allowing businesses to reduce operational costs. Providers like Billie offer scalable solutions that grow with your business without significant reinvestment.
• Fast implementation: Outsourcing to a BNPL provider enables faster time-to-market, allowing businesses to offer BNPL options quickly, often in a matter of weeks.
• Risk management & fraud prevention: Providers like PastPay handle credit assessments, compliance, and fraud prevention using advanced algorithms and AI tools. This ensures a high level of security and reduces the risk of defaults or fraud.
• Scalability: External providers are built for scalability. Whether you’re processing hundreds or thousands of transactions, their systems are designed to handle higher volumes without a hitch.

Key factors to consider in the decision

Here are the critical factors you need to consider when deciding between an in-house or outsourced BNPL solution:

• Resource availability: Do you have the team and financial resources to develop and maintain an in-house BNPL system? Outsourcing is often more cost-effective for small to mid-sized businesses.
• Speed to market: How quickly do you need to implement BNPL? External providers can get you up and running faster, giving you a competitive edge in customer acquisition.
• Risk management: Do you have the technology and expertise to handle fraud and credit risk? Providers like PastPay have specialized tools that offer better risk management capabilities than most in-house teams.
• Customer experience: External providers like PastPay are experienced in offering seamless user experiences for BNPL, which may take your internal team time to develop.

‍

Why PastPay is the smart choice for B2B BNPL

Choosing between developing a BNPL solution in-house or partnering with a specialized provider like PastPay is all about maximizing efficiency, security, and scalability. Building in-house may sound appealing for companies seeking full control, but the demands on resources, from technology to ongoing risk management, make it a challenging and costly approach, especially in the long term.

On the other hand, outsourcing BNPL to a trusted provider like PastPay offers clear, practical benefits. With PastPay, your business can leverage an established, scalable infrastructure, advanced AI-powered risk management, and proactive fraud prevention tools—all crucial for keeping transactions secure without burdening your team. This partnership enables you to deliver flexible payment options to your customers without the hassle of maintaining an entire BNPL operation on your own.

PastPay doesn’t just streamline the BNPL process; it ensures security, compliance, and a seamless experience that lets you focus on growing your business. By partnering with PastPay, you’re choosing a proven, efficient solution that supports your goals for growth, customer satisfaction, and operational ease—making it the smart choice for sustainable success in B2B eCommerce.

Conclusion: weighing your options

Ultimately, whether to build an in-house BNPL solution or partner with a provider comes down to your business's specific needs, capabilities, and growth goals. If having full control over the customer experience and data is a top priority, and you have the resources to invest, an in-house solution could be the right choice. However, for most businesses, outsourcing to providers like PastPay offers faster implementation, better scalability, and superior risk management—all while keeping costs down. 

By carefully evaluating the pros and cons of each approach, you can select the best solution to help your business grow, stay competitive, and offer customers a seamless payment experience.

‍