Last editedJan 20223 min read
For most businesses, B2B payments make up a large proportion of transactions. Whether it’s placing an order with a supplier or contracting an agency to take charge of your marketing strategy, there are a huge number of B2B transactions that occur on a regular basis. And when you make or receive any payment as a business, it’s important to consider any transaction fees that you may incur.
This is where B2B payment systems come into play. These allow qualifying merchants to take advantage of lower processing fees for large transactions that are typical of B2B payments. As well as considering these rates, you should also think about whether the payment system can accept a variety of different payment methods and how it deals with invoicing. Keep reading to find out more about B2B payment solutions and how they can support your business.
What are B2B payments?
Before getting into the specifics of different payment solutions, it’s important to first clarify what is meant by a B2B payment. Put simply, these are transactions that occur between two businesses rather than between a business and customer (B2C) or two individuals (P2P, or Person to Person). B2B transactions tend to be larger and involve different processes that make them more complex.
For B2B payments, GoCardless offers easy access to Direct Debit for both one-off and recurring payments. Collecting B2B payments via Direct Debit has several advantages over card payments. As well as lower transaction fees, Direct Debit also reduces the rate of payment failures and, as a result, increases customer retention. Ease of use and automation are valuable to businesses. GoCardless makes things easy for merchants, providing a single dashboard to access all their payment data. Furthermore, GoCardless can integrate various payment and accounting software, saving businesses time and money on financial admin and credit control. Finally, GoCardless can collect payments in Dollars, Euros, and other currencies for direct deposit into UK bank accounts at the most favourable exchange rates for businesses with overseas customers.
One of the most common and well-established platforms for B2B payment processing is PayPal. Some of the main features that you can access with PayPal include accepting online payments, barcode scanning, inventory tracking and e-commerce capabilities. They also offer online invoicing and even buy-now-pay-later financing options. One of the key strengths of PayPal is that it is widely recognised and accepted worldwide.
You’ll probably want to start a business account if you’re using PayPal as your B2B payment system, and pricing for this varies depending on the specific features that you require.
Another big player in the world of B2B payment methods, Stripe is a US-based company that aims to make online transactions simple. Their focus is on ease of use, and new users should be able to get to grips with the interface relatively quickly. In addition, they offer an API that allows you to customise the platform and streamline the process, but you’ll need a developer to do this.
Stripe operates on a pay-as-you-go basis, meaning that you are charged as a proportion of your transactions. Depending on your sales volume, this could end up being cheaper or more expensive than paying a flat, monthly fee. Particularly for those with very large transactions, Stripe could be a relatively expensive method for B2B payment processing.
Square Payments is a B2B payment system that works well for businesses that also have a lot of B2C transactions, since they offer a free POS system that allows you to keep track of customers and sales. In addition, they have competitive transaction fees and do not impose any chargeback fees.
The downside of Square Payments is that they do not serve high-risk businesses, so you may not be able to use this if you operate in an industry such as travel or finance. Moreover, their capacity for cross-border payments is limited, so it may not be the best choice for multinational businesses.
If you’re a small business that makes transactions with international companies, Wise (formerly known as TransferWise) could be a good option for B2B payment methods. They specialise in processing international payments without any additional fees, and allow you to open multi-currency accounts so that you can accept payments in various currencies.
Setting up your Wise account is initially free, but there are some fees involved with funds or converting to a different currency. In addition, they do not allow you to accept credit card payments, forcing you to use wire transfers instead. For businesses that carry out a large number of card transactions, Wise may not be the best choice.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.