E-markets that integrate a full range of financial services into their offering stand the best chance of surviving the shakeout. However, the most crucial offering an e-market can add to increase its transaction volume is electronic payment and financial services through an established financial institution. So far, e-markets themselves have been unable to fully automate transactions because they lack the ability to provide basic financial services, from payments processing and electronic invoicing to insurance and foreign trade services. First, offering financial services on B2B marketplaces will improve efficiency through automation of transactions. It doesn't help businesses if they get a great price online but lose money and time by having to go offline to transfer funds, invoice the sale, insure it and create escrow accounts.
Risk is introduced any time companies conduct a transaction.
Sellers worry whether they will be paid for the goods or services they provide. Since the risk of doing business in a faceless medium such as the Internet is potentially greater than in the physical world, reducing this risk remains a crucial factor in encouraging online purchases. Until e-markets can offer buyers and sellers products and services that will protect these transactions, companies will be cautious about converting much of their procurement spending online. E-markets that want to offer financial services to their participants can benefit from partnering with an established financial institution for two reasons. First, financial institutions have been dealing with business risk for centuries and are best positioned to act as a trusted online intermediary between trading partners.