However, much has not changed as most firms still shy away from adopting Internet sales, fearing challenging payment systems, high costs and insecurity.
Here, you will learn key B2B eCommerce payment misconceptions, B2B payment techniques, trends, and solutions available now and in the future. Interested in where our services are located or how various payment solutions can be helpful to your company and affect how you can attract clients? Keep reading to learn more.
B2B payments occur when one company pays another for products or services. Such payments can be made through wire transfers, credit cards, or online payment solutions.
In the context of the present study, the performance of the B2B payment system is critical. Reducing the time involved in payment procedures enhances cash tractability reports with trading partners and simplifies operations.
In B2C, payments are not very complex: clients typically pay with a credit card or through online services such as PayPal or Apple Pay. Other academic work shows that B2C transactions have adopted innovative methods like cryptocurrency. However, there continue to be high incidences of fraud, especially in the area of card not present transactions, these have been identified to be costing businesses billions of dollars.
Meanwhile, B2B payments work differently in the following ways: Payment terms usually include net 30 or 60 payment methods that can be further discussed to obtain a certain percentage of a product’s price in advance. Credit cheques are a routine practice when developing new working relationships with suppliers. There still persists fraud issues in these transactions but they are not as rampant as they are in B2C transactions.
It is essential that B2B payment systems can fulfil several needs or requirements. Customers may want to send several invoices to pay or get individual terms for their lines of business, such as the healthcare industry. Let’s explore the most commonly used traditional payment methods:
While they are an older method, paper cheques remain a vital payment method used in the B2B scenario to the tune of 51% in the United States of America. This is a slow procedure whose mean payment cycle is 34 days, and the error rate is 18%. Such charges per cheque may vary between $4 and $20.
ACH, which transacts like cheques but is preferred and cheaper than cheques, is explained next. They enable quicker access to money than paper cheques and are popular, thus contributing 69% of transaction volume in 2020.
Wire transfers are fast, highly secure electronic payments made from one bank account to another, usually for a single, large payment. ACH transfers are the batch type and more costly, but they are secure for single transactions and a significant amount, which is preferred.
In their individual lives, young buyers who are used to credit card utilisation accept credit cards in business activities. Although credit cards are not widespread when paying high-value invoices, they are usable and offer significant features when teamed with other online invoice funding options.
As the digital landscape evolves, several non-traditional payment options are gaining traction in the B2B world:
Especially for retailers, PayPal offers excellent protection against fraud, and the portal’s usability is intuitive.
It helps buyers engage in transactions using their Amazon identity, proving useful for organisations already established in the Amazon sphere.
The development of cryptocurrencies such as bitcoin, Ethereum, and other such currencies to process decentralised payment. Even though though it is not adopted by many businesses yet, it offers an option for organisations pursuing modern payment processing methods.
All the above points provide clear evidence that acceptance of multiple payment options could go a long way in helping firms improve their customers’ experience, and hence, this would result in increased sales. Consumers anticipate acceptable payment methods; if your platform does not support them, they will switch to other market players.
Effective payment systems also increase customer satisfaction, manage cash flows and mitigate the hazards related to delayed payments. Several online services can help with credit risk assessment in the short term, such as Apruve Fundbox.
To succeed in today’s competitive market, B2B payment systems must tackle key challenges, including:
The aim of perfecting the digital payment experience is to increase conversion while optimising the consumption of resources. To clarify, identifying customer requirements and choosing adequate payment methods can improve online stores and increase clients’ satisfaction and, eventually, organisations’ sustainability.
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