Because B2B transactions typically involve companies, payments usually originate from a business account or a business card. These payments may involve one-time transactions or recurring payments, depending on terms agreed upon by the buyer and supplier.
With Payset’s B2B multi-currency accounts, you can send and receive B2B payments locally and internationally on behalf of your company or individual enterprise. Our services allow you to transact 34 currencies and trade 38 currency pairs at the best available exchange rates.
Find out more about B2B payments below.
What Are B2B Payments?
B2B payments are business-to-business transactions. As the name suggests, these payments occur when companies transact with one another, typically as payment for goods and services.
Some small and independent businesses may not need a service specifically dedicated to B2B payments. However, B2B payment solutions can be useful if you experience a large number of transactions. Choosing the right service can save time, money, and effort. This can also streamline interactions with other companies that you transact with regularly.
How Do B2B Payments Differ From B2C Payments?
Business-to-consumer (B2C) transactions involve sales to non-businesses. If you operate a retail or consumer-facing company, you will likely manage B2C payments most often.
By contrast, B2B transactions do not involve a consumer at any point. B2B transactions only involve transactions between companies and businesses.
Even if your company performs B2B transactions infrequently, it is important to support both types of payment. This is especially true if you intend to make sales to other companies, or if you plan to purchase goods and services from another company (think sub-contractors and suppliers).
Below, we’ll look at a few other key differences between B2B and B2C payments.
Transaction Volume and Amounts
B2B payment processing generally involves low-volume, high-value transactions. Even if there are fewer B2B transactions overall, B2B transactions involve more money on average.
The high monetary value of individual B2B transactions can be seen in certain data. According to U.S. Federal Reserve data cited by GoCurrency, the average consumer debit card transaction was worth just $44 in 2016. By contrast, the average ACH debit transaction — a commonplace B2B payment method — was worth several times more at $31,118.
Similarly, the average consumer credit card transaction was worth just $57 in 2016. Meanwhile, the average ACH credit transaction was considerably higher and worth $9,349.
Types of Contracts
B2B payments involve contracts that are different from those in B2C payments. This is because there are extensive requirements that determine how businesses can transact with one another, including government regulations and contractual obligations between parties.
By contrast, B2C payments are generally streamlined to create a simple customer experience. These payments may not involve a contract at all, in the case of retail transactions.
Payment Methods
B2B payments may use a variety of unique payment methods. Whereas B2C payments may involve cash or consumer payment cards, B2B payments may instead involve paper cheques, ACH payments, wire transfers, credit cards, and electronic funds transfers (EFT).
At Payset, we support multiple payment methods. We also support top payment networks including ACH, EFT, SWIFT, SEPA, the U.K.’s Faster Payment Service (FPS), and CHAPS. We also support free, instant payments between Payset customers.
Some of these payment types are more frequently used as a B2B payment method than others. Regardless, Payset will work to provide the best payment option to meet your own needs and those of your transaction partner.
How Do Businesses Accept B2B Payments?
Businesses can choose to send and receive funds through multiple B2B payment methods. Below, we’ll look at a few different transaction types that are currently popular.
Credit Cards
Business credit cards are a primary payment option for outgoing B2B payments. This option provides a simple and inexpensive way for companies to spend money.
Credit cards are convenient, easy to monitor, and extremely commonplace. When you make a credit card transaction, it is accepted instantly regardless of settlement times.
Because credit cards are so widely used and accepted, they have very few disadvantages. However, you should account for any fees or usage conditions on your credit card of choice. You should also attempt to pay off your balance quickly to avoid interest. Also, note that credit cards are largely intended for spending rather than receiving funds.
At Payset, as of this writing, we are working toward offering prepaid cards that act as an alternative to credit cards. These cards do not provide credit but are instead funded by your account balance. They can be used to spend money anywhere that major credit cards are accepted — online, in stores, and at ATMs.
Cheques
Paper cheques are a traditional payment method that is still in widespread use. Cheques are straightforward, easy to track, and widely accepted by banks and businesses.
However, cheques have a few disadvantages. Cheques can bounce if an account cannot cover the amount, and manually-written cheques are vulnerable to human error and fraud. It can also be relatively time-consuming and expensive to purchase cheques and send them by mail.
Payment Gateways
Payment gateways are one of the most common ways to handle online or digital B2B payments. These services allow you to accept more than one payment type — such as credit card payments, payment network transactions, and digital wallets — through a single interface.
You should be aware that payment gateways are intended for a specific purpose: receiving funds digitally. As such, payment gateways may not meet your needs if you transact with businesses that are limited to traditional options like cheques and cash.
At Payset, we allow you to accept payments and transactions over a variety of payment networks, all through our multi-currency account services.
Bank/Wire Transfers
Bank or wire transfers are transactions in which one business sends funds to another business account. This type of transaction is handled through a bank or financial institution.
To make a transaction of this type, you will need to obtain identifying details from your transaction partner, such as their bank account number and other relevant information.
Wire transfers are secure and traditional and can move large amounts of money at once. Wire transfers are also relatively fast and often settle within one day — though this is perhaps not the fastest transaction method overall when compared to credit cards.
Bank and wire transfers have one main disadvantage: they are not intended for small transactions. They may be prohibitively expensive for small amounts. In wire transfers, flat fees typically range between $15 and $50, making transactions in that range unaffordable.
Cash
If you operate a small business on a local scale, or if your business interacts with others in person, you may choose to accept and make certain payments in cash.
Cash payments have one major advantage: there are no transaction fees, assuming that you have the cash you need on hand and do not need to pay withdrawal fees to a bank.
However, large cash transactions are highly regulated and restricted, especially internationally. Cash is also difficult to manage from accounting, invoicing, and tax perspectives. As such, it is difficult to use cash as a B2B payment method on a large scale.
ACH Payments
ACH payments are transactions over an Automated Clearing House network.
This term typically refers to the United States ACH Network, which is operated by the National Automated Clearinghouse Association (Nacha). As such, this payment type is largely used in the U.S., though international ACH payments are possible in some circumstances.
There are numerous advantages to ACH payments. ACH transactions notably offer very low costs: some estimates suggest that the median ACH transaction costs just 29 cents. ACH payments can also be reasonably fast, as transactions are processed within one to three days. Furthermore, ACH is extremely secure due to significant government oversight.
However, this method also has some limitations. ACH payments are generally intended for recurring payments, such as invoices and payroll deposits, rather than one-time payments.
Banks may also limit ACH transfer amounts — per transaction, per day, or per month. As such, ACH transfers can be impractical for large and frequent business transactions.
Trends in the B2B Payments Space
The B2B payment space has seen various trends emerge in recent years, all of which affect how businesses conduct their operations and handle transactions.
Decline in Cheques
Businesses have partially moved away from cheques in favour of new transaction methods such as digital payments, wire transfers, and credit card transactions.
Nevertheless, cheques are far from obsolete: according to some estimates, about 40% of B2B payments still involve paper cheques.
As such, businesses should aim to support modern B2B payment processing while also retaining the ability to handle cheques as a legacy transaction method.
Growth of Split Payments or Deferred Payments
Deferred payment methods have become popular thanks to the growth of “Buy Now Pay Later” (BNPL) transactions — defined as installment-based payments without interest.
Data from Polaris Market Research suggests that the BNPL market was worth $6.24 billion in 2022 and may reach $80.52 billion by 2032. Though BNPL payments are largely used in e-commerce and B2C payments, this method can be applied to B2B transactions as well.
Rise of Mobile Devices
Mobile devices are frequently used for payments. While this trend once again originated in B2C markets, it has potential in the business-to-business market as well.
Sectors that rely heavily on delivery, such as transportation and food supply, should expect to rely on B2B mobile payments as time goes on. Companies may also choose to handle mobile B2B payments for their own convenience and to work with a wider variety of companies.
Real-Time Processing
Banks are now beginning to offer real-time payments, allowing customers to transact with one another and settle balances instantly on a 24/7 basis. This approach challenges other transaction methods including credit cards, wire transfers, ACH, and similar approaches.
Although the term “real-time payment” (RTP) often specifically refers to services provided by traditional banks and financial institutions, other services can provide similarly fast transactions.
Payset supports instant transactions when both you and your transaction partner are members of our platform. Other payment times are subject to the limits of the underlying network.
Peer-to-Peer Payments
Peer-to-peer (P2P) payment apps such as PayPal are extremely popular among individual users. However, many of these apps also serve businesses and provide B2B payments.
Though P2P payments may encompass a broad range of services, they typically make it easier to send funds to and from other transaction partners. With P2P transactions, you only need to open your app and provide a small amount of information to direct your transaction.
B2B platforms can replicate the P2P process by streamlining the steps required for payment. You can expect most modern B2B payment solutions to offer similarly streamlined features.
Why Do Companies Use B2B Payment Gateways as a B2B Payment Solution
B2B payment gateways allow companies to handle multiple payment types — including card payments, payment network transactions, and digital wallets — all through a single portal.
Apart from handling a large variety of payment methods, there are many reasons to use a B2B payment gateway. We’ll look at a few benefits below.
Improves Cash Flow
B2B payment gateways can improve cash flow by automating payment processes, generating reports, providing invoicing features and accounting tools, and more. If you use these tools
correctly, you’ll be able to spend, save, and bring in money in a more effective way.
Simplify Accounting
A B2B payment gateway can help simplify your accounting practices. Payment gateways may provide tools for accounting, bookkeeping, risk management, and tax reporting.
Precise features may vary. Regardless of the exact tools that your B2B payment gateway of choice provides, it will likely help automate your accounting process in some way — even if you use it in conjunction with your existing accounting and business software.
Increased Security
B2B payment gateways typically provide industry-standard security and anti-fraud tools. This reduces the risk that fraud might impact you or your customers. Quality security can potentially save you from costly lawsuits and fines as well as any possible damage to your reputation.
Save Time & Labour
Payment gateways can save time and labour. Using a service of this type will reduce the need to employ individuals to handle payments and paperwork. Plus, you’ll likely benefit from lower transaction costs and faster settlement due to the digital focus of payment gateways.
How to Improve Efficiency by Automating Payments Via a B2B Payment Solution
Digital payments are an effective automation tool for B2B payment processing. This can reduce the time needed to issue, receive, and process payments and may improve cash flow.
A robust B2B payment solution is also a good way to simplify accounts payable and receivable, which can reduce paperwork and operational requirements for your business.
Furthermore, some B2B payment software can automatically scan, record, and store invoices without the need to deposit and reconcile documents. Adopting a B2B payment solution will likely help you save time, money, and other resources.
How Can Payset Help?
At Payset, we provide multi-currency accounts with numerous B2B payment features.
With an account, you can hold 34 different currencies and transact funds in over 180 countries. Plus, you can trade 38 currency pairs on our foreign currency exchange.
You’ll additionally be able to accept and process payments over various payment networks (including but not limited to SWIFT and SEPA). See Payset’s list of supported currencies and list of supported jurisdictions for more information.
We also provide extensive security features. We offer login-based account access, two-factor authentication (2FA), and a fraud reporting process to ensure your funds remain safe.
With a Payset account, you’ll benefit from low fees, fast transactions, industry-standard security, quality customer support, and more. Our multi-currency account can help your business perform B2B payments quickly and affordably, regardless of its size or circumstances.
If you’re ready to get started, click here to start the signup process. Or, if you’re not sure whether Payset is right for you, contact our sales team with your questions or to book a demo for more information.
FAQs
What Is a B2B Payment?
B2B payments are business-to-business transactions. As the name suggests, this occurs when companies transact with one another — typically to perform payments for goods and services.
Unlike retail transactions, B2B transactions do not involve a consumer at any point.
What Is a B2B Payment Solution?
B2B payment solutions allow businesses to carry out B2B transactions.
There is no single B2B payment solution that will allow you to handle every type of business transaction. However, multi-currency accounts like Payset can help you handle various digital transaction types that you might come across in B2B transfers.
Combined with other solutions, such as traditional cash and cheque payments, Payset’s multi-currency accounts can meet most of your payment needs.
What Are the Most Common B2B Payment Terms?
B2B payment terms indicate when payments are due. Common terms include net 30, net 60, and net 90, with the number representing the amount of days until payment is due.
Any number can potentially be used to describe these B2B payment terms. Additionally, terms can be phrased as a discount. For example, “5/10 net 30” means that payments are due in 30 days — with a 5% discount if full payment is received within ten days.
How Are B2B Payments Made?
B2B payments can be made through various commonplace methods, such as paper checks, ACH payments, wire transfers, credit cards, and electronic funds transfer (EFT).
At Payset, we focus on supporting digital transfers through our multi-currency accounts. We can help you handle credit card transfers and transactions on various payment networks including ACH, EFT, SWIFT, SEPA, the U.K.’s Faster Payment Service (FPS), and CHAPS.
What Is the Most Preferred Payment Option in B2B?
There is no single preferred option for B2B transactions and payments. Instead, you should agree with your transaction partners on a method that works best for all parties.
Nevertheless, your business should support the various payment options described above. Once again, this includes paper cheques, ACH payments, wire transfers, credit cards, and electronic funds transfers (EFT). Electronic payments are especially key in the modern era.
What Are B2B Cross-Border Payments?
Cross-border payments are transactions between businesses located in different countries.
Because certain countries have limited access to B2B payment solutions, some companies may instead rely on traditional banking. With those traditional services, you may need to provide substantial information to begin a transaction, and you may experience long settlement times. Those limitations can prevent you from paying partners and employees promptly.
Payset and other digital financial services provide onboarding services for both your business and its payees. These streamlined services take care of data collection for you.
With Payset, you can upload account details and set payment preferences in a matter of minutes. This advantage can save your business both time and money. Plus, it can simplify accounts payable by providing a central location for all transaction data.
What Are ACH Payments?
ACH payments are transactions made via an Automated Clearing House network. The term usually refers to the United States’ ACH Network, which is operated by Nacha.
ACH transactions are frequently used for recurring payments such as invoices and payroll deposits, which makes this method ideal for some B2B payments.
ACH transfers are inexpensive and reasonably fast. The median ACH transaction costs only 29 cents, and transactions are generally processed within one to three days. Some banks set amount limits on ACH transfers, so this may be an impractical method for large and frequent transfers.
