B2B organizations have sought to match many of the essential trends that have emerged out of B2C eCommerce. But lacks when it comes to the online payment.
And the primary cause for this is the incomplete understanding of how different transactions are done between businesses than they are between companies and consumers.
If we are talking about B2C business here the process of the transaction is very straight forward.
A customer needs to select the products then save the desired ones into the cart, and pay the full payment by(using either a Debit/Credit card or another form of electronic payment) before they get shipped.
Prices are identical for each customer and, when the purchase is complete, an electronic receipt is sent to the buyer. Also, as the payment volumes are low, the business bears the cost of any card processing fees.
Complexity in B2B transactions
But if transactions occur between businesses, then it would become complicated. First of all, prices will vary depending on some factors, such as whether the buyer is placing a large order, whether the orders are recurring, or might be having special terms with the supplier.
Payments are also not made at the time of purchase. Instead, it takes weeks, even months, later, the supplier will send the buyer an invoice for the amount they owe.
Often, it will take the additional buyer weeks to review the invoice and send payment back, and the process generally involves many different people.
Despite the complexity in B2B transaction, new and innovative solutions are being developed and deployed by us at Webkul that are making it easier, faster, and cheaper for both buyers and suppliers to exchange goods.
The B2B marketplaces must include a payment system which is must work according to the actual B2B environment. that means:-
The payment methods: As only credit card is not sufficient to pay on a B2B marketplace. Bank transfers, checks & other modes of payments are necessary.
Payment terms: The payment made before delivery is very uncommon in B2B business. The B2B marketplaces must offer the possibility to pay in several installments.
Credit risk: Because some orders will get shipped before the payment gets completed, you must guaranty the chance of payment.
To satisfy the requirements of the B2B environment, let us see some of the leading payment options for your B2B marketplace:
Pay by Purchase Order
It is very common for business buyers to “pay” via a purchase order. The challenge for the seller is to have precautions in place to ensure that only approved customers can use purchase orders, for preset credit limits.
In this method of Payment, the buyer can create a purchase order without immediate payment to the supplier. But the buyer needs to pay after the products have been delivered within a defined time duration because the Purchase Order also has the validity.
In Purchase Order Management, you can easily create suppliers and generate purchase orders for them. After receiving the products, you can check the quality, and correct shipment of the products update the stock on the store after that pays back to the suppliers.
In addition, sometimes there are prepayments or partial payments made by the buyer based on the consignment received, whether its damaged or partial order is received.
Further, upgrade the right stock on the store and make the payout to suppliers for their products.
Automated Clearing House (ACH), e-Check
ACH and e-check payments are electronically withdrawn from the buyer ’s account, transferred over the ACH network, and get deposited into the seller’s account. ACH main function is to move money from one account to another.
Can be seen as an excellent alternative for credit card payments.
You can configure your ecommerce platform to allow customers to pay via e-check or ACH can be seen as an excellent alternative for credit card payments.
They are a straightforward and relatively cheap method with a long float process. It is not complicated to learn or set up at a very high cost. However, it can be lost or damage in transit and end up being pretty expensive. When used, the accounting process becomes quite tedious.
Transactional Payment Service Providers
There are several payment methods available on the marketplace (e.g., credit card, transfer and more), along with the possibility to pay in several installments. This option allows the store owner of the platform to monitor payments.
The companies like Adyen, Stripe, Braintree & Paypal provide the services mentioned above.
By Credit Cards
Credit cards are another B2B payment method. This method makes it easy to provide credit, and it’s convenient too. They tend to be reasonably secure, and if there is a dispute situation occurs, then the credit card company will help you better.
However, this can be an expensive payment method with various costs and fees attached to each transaction.’
How secure is electronic B2B payment processing?
As your payment gateway will handle credit/debit card transactions, make sure it’s compliant with the Payment Card Industry Data Security Standard (PCI-DSS).
You can check out what type of PCI compliance level they would provide to you, and if it allows you to accomplish all the functionality your business needs.
If you’re a merchant using Stripe, Braintree kind of payment solutions, you can rest assured that your payment solution is PCI compliant.
Full-stack Payment Service Providers
This type of payment service provider offers payment reconciliation making it easy for professionals to track and monitor the payment of each & every order on the list.
Providers like Adyen, Stripe, Braintree are some of the prominent payment services providers.
These payment service provider generally includes gateway, risk management, and front-end processing services.
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