The Basics Of B2B Payment Gateway

Business-to-business (B2B) payments are transfers of value denominated in currency from one business to another for goods or services supplied. They can be single transactions or recurring payments.

In today’s business world, brands need to provide their customers with various payment methods that are both user-friendly and safe. Choose a digital B2B payment solution that allows you to offer all major types of payments while simplifying your accounts payable processes.

Credit Cards

Business-to-business or B2B transactions are large, often recurring purchases businesses make for inventory and services. These payments can be enacted through an online marketplace, B2B payment gateway, or other platform. B2B payments differ from retail payments as buyers and sellers negotiate terms, including payment schedules and invoice delivery methods.

For example, buyers may pay on an agreed-upon due date using an ACH or wire transfer instead of paying immediately with a credit card. Many businesses prefer using credit cards as a payment method for B2B transactions since they provide flexibility with multiple payable process options such as e-checks and electronic funds transfers. They also offer a way to track expenses, which is essential for accounting purposes and compliance.

B2B e-commerce is growing, with a projected value of $1.8 trillion in 2023. The growth of e-commerce platforms is fueled by the growing number of sellers offering various products and services. Those companies must ensure they provide their customers with an experience that is secure, fast, and convenient.

While traditional trade credit can be an excellent tool for B2B, it often requires dedicated resources from both the buyer and seller to manage the process. This can include a third-party financial institution, a dedicated employee, and lengthy processing cycles. This can be particularly challenging for B2B sellers with tight profit margins, as every extra minute spent managing a payment cycle eats into the bottom line.

Other popular payment methods for B2B include ACH, wire transfers, and cash. ACH, or Automated Clearing House, is a digital payment process that moves money electronically from one account to another. These transactions can be processed as one-time or recurring payments and are popular for high-volume invoices. Another digital option is a virtual credit card, which are numbers that are good for only one transaction and are assigned a unique amount. This provides a layer of security and helps prevent fraud.

B2B transactions often use wire transfers as a reliable and efficient way to send high-value payments to international recipients. While these payments are less common than checks or ACH, they can be an excellent solution for companies that require a highly secure and expedient payment solution.

A company must support multiple B2B payment methods to give customers maximum flexibility. However, those who encourage ACH payments or credit cards and hope their system will handle the rest are likely leaving money on the table. An ideal solution is to adopt a fully-integrated, payment-agnostic accounts payable automation system that can handle all types of B2B payments.

Electronic Checks

Buyers typically pay for products or services in business-to-business transactions with a credit card, cash, or electronic check. These payments are often recurring or more significant than those made by individual shoppers online. The payment processing landscape has shifted in recent years as more businesses adopt automated systems to increase efficiency and focus on growth. These secure and scalable tools provide various benefits to B2B companies.

Payment technology providers offer various services, including payment processing, invoicing, and point-of-sale systems. The best e-commerce solutions include integrated reporting, payment reminders, and late or missed payment alerts. This functionality streamlines accounting processes and reduces the risk of errors or fraud.

B2B customers usually require more rigorous verification than those making purchases with personal credit cards. They may need proof of business ownership or tax ID, which generally requires a higher purchase volume than consumers. Additionally, many buyers will require negotiated terms and purchase orders, which can add to the complexity of the transaction.

Luckily, modern payment solutions have the technology to support these complex requirements and streamline the transaction process for buyers and sellers. These platforms use data to confirm buyers’ identities and assess their financial situation. They also integrate with banking systems to automatically transfer funds upon confirmation. These systems are a huge improvement over traditional trade credit, which can take days to approve and be risky for small businesses.

One commonly used method for B2B payments is the electronic check or e-check. This digital paper check form uses a payment authorization system to collect information about a bank account and routing number. After the buyer authorizes the payment, the information is sent to the payment processor to verify the funds. The e-check is then processed and deposited into the seller’s bank account. E-checks are not only fast, but they can also save money on processing fees and eliminate the costs of printing, ink, and postage that come with traditional checks. These advantages of e-checks can make them a preferred method for some businesses, especially those with a high volume of recurring payments. Additionally, e-checks can help to eliminate the “float” period – the time between issuing the payment and it appearing in the company bank account – which can help to align cash flow with invoice payments.