Interested in B2B payment processing methods? FLO Business Solutions is here to cover your options. Learn the ropes below!
What is “B2B” compared to “B2C”?
If you’ve heard of B2B, you’ve probably come across B2C as well. The question is: What sets them apart?
Answer:
B2C: “B2C” refers to business to consumer. This is the type of business that sells directly to individual consumers. Think small businesses on Etsy, for example, or big businesses that sell large quantities of product to large quantities of customers. While each approach has its pros and cons, when it comes to payment processing, conventional wisdom is that B2C is easier than B2B. At least on the business’s end.
B2B: “B2B” refers to business to business. Rather than selling to individuals, you’re selling to your fellow businesses. Often, this means selling larger orders. While this can be high reward, it also adds a bit of complication on the payment processing end. When selling business to business, you’re often trying to maintain longer-term relationships. You want repeat orders, and a part of that involves ensuring that payments are processing accurately and on time. Trust is key. As such, it’s crucial that you master B2B payment solutions.
What makes B2B payments different from B2C payments?
A few factors set B2B payments apart from B2C payments. Much like B2B is fundamentally different from B2C on a broader level, B2B payment processing has different needs.
Keep in mind that B2B marketplace payments tend to require more time. The amount of money involved can be a lot higher than it is with regards to individual consumers. This means the approval and settlement of the payment can take longer—days or even weeks. In short, you’re generally going to require more complex payment software for B2B than you would for B2C.
What is the B2B payment processing method?
There isn’t one type of business to business payment method. Rather, the marketplace offers a few different options to business owners. In fact, some B2B sellers prefer to offer their clients multiple options. Not only does this expand your potential client base—it can also help ensure repeat business. Of course, this means you’ll want to work with a vendor that can match your needs as well.
Some of your B2B payment options include:
- Virtual business to business credit card processing
- ACH payment processing
- Digital wallets
- Electronic checks (eChecks)
- Wire transfers
- Commercial credit cards
- Paper checks
Needless to say, some of these options are more common than others. You don’t see quite as many B2B sellers accepting paper checks these days! But nonetheless, your operation is your operation, and it’s important to familiarize yourself with the pros and cons of multiple solutions.
How do B2B payment processing solutions work?
Commercial credit cards. One of the most popular B2B payment solutions, commercial credit cards, remain quite common. Although they come with processing fees, buyers fall back on them often, in part due to their familiarity and reliability. As a seller, however, you may run into a few drawbacks. Each credit card transaction costs the seller, which naturally adds up over time. Still, it’s difficult to decline credit card payments, simply because of their prevalence.
Want to accept business payments while cutting down on credit card fees? You have options. New technologies help reduce manual processes, creating a more automated system that increases cash flow. Rather than focusing on credit card payments, you and your team can focus on more high-level endeavors.
ACH (Automated Clearing House). Another common B2B payment processing method, ACH, allows you to process payments electronically. It’s quick, convenient, and affordable. Essentially, ACH connects businesses across the United States. It transfers funds from business to business, even when those businesses use different banks. It’s possible to utilize ACH transfers internationally, but intermediary verification can slow the process down.
Wire transfers. Although not as popular domestically, wire transfers do remain more common than ACH when it comes to international payments. We usually manage wire transfers through RTP, CHIPS, or Fedwire. The great thing about this method is that as soon as the money hits the target account, it’s available. However, its lack of security presents concerns for B2B sellers and buyers.
Frequently Asked Questions
Still have some questions about B2B payment processing? Luckily, we have some more answers!
How do virtual credit cards differ from commercial credit cards?
Functionally speaking, virtual credit cards don’t differ too much from their physical counterparts. You can place limits on how often they’re used and by who, and they tend to be very secure. They may come with similar expenses associated with physical B2B card processing. But similarly to physical cards, we can potentially cut these expenses with more recent technology.
What’s the difference between eChecks and paper checks?
Aside from the obvious differences—one is electronic, while the other is paper—eChecks tend to be faster. Plus, they’re less expensive to manage than paper checks. They offer all the conveniences of any digital payment methods, with fewer drawbacks than paper checks.
All that being said—B2B sellers use paper checks surprisingly often, more so than the average individual consumer. Why? We’re not quite sure. It could be simple habit, or a sense of comfort that comes with a physical payment. However, digital methods are easier, often less expensive, and generally more secure. As you process large payments and scale up your ecommerce business—while working with clients who may not be physically close to—you’ll have more options with digital methods.
What are the benefits of Level 2 and Level 3 processing?
Since there is more information about a transaction and thus additional transparency and security, Level 2 and Level 3 processing have a few additional benefits. These include:
- Lower interchange fees
- Easier tracking and verification
- More data collection points
- Better compliance
Which method is right for me?
That depends greatly on your business and your goals! Fortunately, FLO Business Solutions is here to help you find the perfect solution. Get in touch with us here or call (803)-887-7356. Let’s find the perfect B2B payment platform for you.