Understanding The B2B Payments Landscape

Get a comprehensive overview of the B2B payments landscape. Discover the five best practices to optimize your B2B payment operations.

The world of B2B payments has seen massive shifts in recent years with new technologies and digital solutions emerging that make payments more efficient and secure.

This article will provide a crash course on the B2B payments landscape and what it may look like in the future so your business can stay up-to-date and prepared. It will explain the differences between B2B and B2C payments and the unique challenges associated with business-to-business payments. It will also provide five best practices for processing B2B payments that your business can follow to ensure success.


How Are B2B Payments Different from B2C Payments?

The most distinguishing (and obvious) factor that differentiates B2B and B2C payments is the payment recipient. B2B payments are transactions between two businesses. These businesses could be retailers, e-commerce merchants, large corporations or other entities. B2C payments are simply transactions between a consumer and a company.

Other notable but less apparent differences exist as well. B2B payments are typically far greater in value than B2C payments and often involve more complex payment terms and conditions. 

Unlike B2C transactions, where payments are generally rendered at the time of purchase before receiving a product or service, B2B payments are not typically made in advance. Instead, businesses will often receive the goods they ordered and settle the invoice with their supplier once the order is fulfilled. 

B2B payments are also more commonly used for recurring purchases, whereas B2C payments are generally for one-time purchases. 

The final key difference pertains to the decision-making process. B2B purchasing decisions are typically made by multiple people within a business and require several steps before approval. B2C purchasing decisions are usually made by an individual customer and are completed in one step.

The Challenges of B2B Payments

Running a successful B2B business requires efficiently and effectively managing payments. When handling B2B payments, businesses must consider customer preferences, payment terms, and payment security, among other things. Here's a look at some of the main challenges:

Payment security: B2B payments have a high risk of fraud because there is often more money involved than in consumer payments. Businesses often make large payments to vendors and suppliers, so these transactions are prime targets for fraudsters. 

Additionally, the complexity of B2B payments means detecting fraudulent activity can be difficult. If a fraudulent charge is processed, a business can be held liable for the money, cost of goods sold, and any fees or penalties applied during the chargeback process. 

High processing costs: The high frequency and value of some B2B payments can create problems regarding payment charges. Accepting credit cards or using wire transfers regularly can add up to a significant amount and significantly erode profit margins. Additionally, B2B payments often involve multiple currencies, which can add an additional layer of complexity and costs. 

Longer billing cycles: Most B2B payments are processed on terms, usually anywhere from 30 to 90 days. Businesses may have to wait longer for payments to come in, resulting in them struggling to meet their financial obligations. The longer a company has to wait for payment, the more likely it is that cash flow will be impacted negatively. 

Manual processing: Processing B2B payments is highly labor-intensive and costly as accounts receivable and payable teams often do it manually. Businesses also often need to manage numerous transactions in different stages of the billing cycle simultaneously, which makes processing, tracking, and reconciliation a more significant challenge.

Compliance: Businesses often need to verify, authenticate, and onboard multiple different types of business entities and comply with various tax and payment-related regulatory requirements. Additionally, the financial data exchanged between businesses are often confidential, and payment processes must be secure and compliant with data protection laws.

5 Best Practices for B2B Payments

1. Use a Secure & Compliant Payment Service Provider

B2B payments are made more complicated by compliance requirements and elevated fraud risks. Partnering with the right payment service provider can help reduce this complexity, lessen risks and compliance burdens and keep your transactions secure.

Key capabilities to look out for include data encryption and advanced fraud protection measures like 3D Secure 2.0 (3DS2) which provide an additional layer of authentication and protection.

Compliance with The Payment Card Industry Data Security Standard (PCI DSS) is also critical. Using a payment service provider that is PCI DSS compliant allows you to outsource the responsibility of ensuring PCI DSS compliance. This can save your business time and money, as you do not have to invest in the personnel and resources necessary to meet PCI DSS compliance requirements. 

When you partner with Pay.com, you can rest easy with all of these advanced security features and more! Pay.com has Level 1 PCI DSS compliance which is the highest level. It also tokenizes credit details in transit to keep customers' information safe and secure. 

For merchants looking to go a level further, Pay.com supports 3D Secure 2.0 (3DS2), which provides an additional layer of authentication.

Click here to create your Pay.com account now!

2. Automate Payments Management

Automating B2B payment processes like tracking and reconciliation is essential because it helps reduce costs, improve efficiency, and increase accuracy. 

Automating these processes eliminates the need to manually track and reconcile payments, which can be time-consuming and prone to errors. Automation also helps ensure that payments are received and reconciled on time, reducing the risk of late or missed payments.

Achieving automation can be done by setting up systems and processes that leverage technology to automate the tracking and reconciliation of payments. This includes implementing specialized software tools, setting up automated payment reminders, and developing rules-based reconciliation processes. 

In addition, your business should ensure that its systems are integrated to ensure that all payment data is visible in one system and can be used to generate real-time insights.

3. Offer Multiple Payment Options

Today's B2B buyers expect to be able to pay for goods and services in a wide variety of ways, including credit cards, debit cards, PayPal, ACH, wire transfers, and more.   

Offering multiple payment methods enables your business to meet these expectations. It makes it easier for customers to pay since they can choose the payment method that best suits their needs. This results in increased sales and can help your business retain customers and build loyalty.

The easiest way to offer multiple payment methods is to partner with a payment service provider that can process popular local payment methods in every market you operate. 

With Pay.com, you can offer a variety of payment options to ensure your customers can always check out using their preferred payment method. You can also quickly add new methods in a couple of clicks through the Pay Dashboard

4. Leverage Payment Analytics

It is vital to have access to an easy-to-use, real-time, and unified source of payment analytics that provides in-depth insights for reviewing and optimizing your payment operations. 

With granular payment insights, you can identify inefficiencies and make necessary changes to your payment processes to improve cash flow management and reduce fraud. 

Payment analytics and reporting can also help your business gain greater visibility into your customers’ payment habits, allowing you to develop better strategies for collecting payments, improving customer relationships and increasing revenues.

Some payment service providers offer advanced payment insights and reporting capabilities, but specialist tools are also available.

5. Establish Clear Payment Terms 

Establishing clear payment terms is essential for any business, as it sets out the guidelines and expectations for both the buyer and the seller. Payment terms can include when and how payments are due, the payment method, and any late payment penalties. Best practices for establishing clear payment terms include:  

Setting a payment due date: This should be set at a reasonable time, such as within 30 days of the invoice.  

Specifying the payment method: This should be clearly outlined in the invoice and can include online payment methods like PayPal or credit cards, checks, or wire transfers.   

Including late payment penalties: This can be useful for discouraging buyers from missing payment deadlines.   

Providing payment terms upfront: Payment terms should be outlined in the contract before any work is done.   

Communicating payment terms clearly: Payment terms should be communicated clearly throughout the process, including in the invoice and in any emails, phone calls or on your website.  

The Future of B2B Payments

Predicting the future is not a simple task. However, the development of B2B payments is accelerating toward more digitalization and automation. As businesses continue to move away from traditional payment methods such as checks and paper invoices, they will increasingly opt for digital payment methods. 

New digital payment systems that simplify and speed up B2B payments will proliferate and become mainstream in the coming years. Businesses can already take advantage of virtual cards, which enable buyers to pay for goods via a digital card and send payments into a business’s account without the company needing to do anything. Real-time payment schemes are now starting to allow B2B payments to happen in real-time. 

We’ll also see greater end-to-end automation, from invoicing to payment remittance and reconciliation. Many of the manual processes currently completed by finance and accounting teams will all become automated, resulting in more efficient processing and considerable savings for businesses.

When it comes to security, as businesses become more reliant on digital payments, the need for secure and reliable payment systems will only increase, driving innovation. As a result, we’ll see more robust encryption technology, improved authentication methods, more secure data storage and increased use of biometrics. 

The use of blockchain technology is also likely to become more common in order to create secure and immutable transactions. 

Why Choose Pay.com as Your Payment Service Provider? 

Pay.com is a secure, compliant and easy-to-use payment service provider, offering businesses a hassle-free way to accept payments from customers worldwide. With Pay.com, your business can accept credit and debit cards and a variety of other payment methods from customers and easily add new ones in just a few clicks. 

Pay.com has Level 1 PCI DSS compliance certification (the highest level) which is maintained by regular independent auditing and testing. This means you don’t need to worry about ensuring PCI DSS compliance on your own, saving your business time and money! 

Pay.com also uses a secure tokenization system to protect customers’ data while in transit. All credit card numbers are tokenized with none of your customers’ card information ever kept on Pay.com servers. Beyond these security features, Pay.com supports 3D Secure 2.0 (3DS2), enabling you to offer an extra layer of authentication and safety. 

Integrating our APIs is straightforward and fast, allowing for a quick and simple setup no matter how complex your existing systems are. 

When it comes to managing your payments on a daily basis, Pay.com has you covered. The user-friendly Pay Dashboard makes it incredibly easy for your team to add new payment methods, issue refunds, and gain access to detailed payment analytics, reports, and insights. This all-inclusive payment management interface allows you to manage and optimize your payments quickly and efficiently.

Click here to get started with Pay.com now!

The Bottom Line

B2B payments differ considerably from B2C payments and come with their own set of challenges. However, following the five best practices outlined in this post, you can ensure that your business’s payments are secure, efficient, and cost-effective. 

The good news is that as technology continues to evolve, B2B payments will become increasingly streamlined and secure, making payment processing more manageable and efficient than ever.

With Pay.com, you can tap into that future today. Pay.com provides your business with a compliant and easy way to accept and process multiple payment methods from customers worldwide and provides best-in-class security to keep you and your customers safe. 

Plus, it offers detailed payment analytics and insights that can help optimize your payments and deliver better payment experiences that drive your business growth. 

Click here to sign up for Pay.com now!


What's the best way for a business to accept B2B payments online?

Pay.com makes accepting B2B payments online simple, easy and hassle-free. With Pay.com, you can accept credit and debit cards and a range of other payment methods from customers online while safeguarding your business from fraud and keeping you compliant. 

Pay.com is PCI DSS Level 1 compliant and supports 3D Secure 2.0 (3DS2). Plus, Pay.com uses a secure tokenization system to protect your customers’ data while in transit.

How do B2B payments work?

B2B payments involve the exchange of funds between two businesses. The payer initiates the payment process by sending a payment request to the payee via credit card, ACH, wire transfer, check, or another payment method of their choice. The payee then receives the payment request and confirms the payment. Once the payment is received and verified, the funds are transferred to the payee’s account.

What type of electronic payment is favored in B2B?

ACH and wire transfers are the most commonly used types of electronic payments in B2B transactions. ACH transfers are an online network that enables businesses to process large transactions. Wire transfers are a secure, fast, and reliable method of transferring funds from one bank account to another. Credit cards are another popular electronic payment method in B2B.

What are the key features of a B2B payment system?

B2B payment systems should be able to support multiple payment options and enable fast, reliable and secure payment processing. Security is essential for protecting customer data and ensuring safe and secure payments are not fraudulent. Additionally, reporting and analytics capabilities help streamline and optimize the payment process and simplify day-to-day management.

Meet the author
Anthony Back
Anthony is an experienced fintech analyst, content marketer, and copywriter based in Tel Aviv, Israel. With a deep understanding of payment technologies, he has worked with leading financial institutions and fintech companies worldwide.
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