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Payment Processing

B2B Payment Processing: Everything You Need to Know

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B2B payments, to put it simply, are payments processed between two businesses for any goods or services. This is a business-to-business transaction that does not involve any consumers. Businesses such as startups, retailers, corporations, etc., undergo B2B payments.

Overview of B2B payments:

The buying and selling process between businesses have their internal mechanisms. Business buyers have various needs depending on which their requirements change. In contrast, the sellers have a complex internal processing system that accommodates higher sales and quantities. So, Payments must go through channels exclusive to those transaction requirements. Digital B2B payments speed up the entire process from issuing and receiving to processing. All these results in improving the business’s cash flow.

How does B2B payment processing works?

In case you missed our blog on Understanding the ecosystem of Online Payment Processing, we suggest you head back to read it first to understand better as you continue further.  B2B payment processing is not very distinct from B2C payments. Whether it’s cash, credit cards, or digital funds, the significant difference depends on who pays who and how.

Difference between B2B and B2C payment systems:

  • The primary difference is which party is at the receiving end. B2B sells services to another business, while B2C sells services to a consumer. Since both models have different parties involved, each requires a different payment processing system.
  • When looking at their buying behavior, it seems there is a significant difference in the number of orders placed and the frequency at which its placed. The quantity of things ordered in B2B transactions is often higher than in B2C transactions.
  • Payments are settled only once the goods are received and the invoive is turned over in B2B transactions, although that is not the case in B2C transactions. Consumers pay for their purchases at the point of sale or in some cases, before receiving the goods or services.

B2B payment processing: How do businesses pay each other?

B2b payments through credit, cheque
  • Cheques – Cheque is a payment method that has been in use for a long time. The seller deposits the cheque (paper or electronic) received from the buyer. The buyer’s bank account requests to transfer the funds from the seller’s account after despositing the cheque.
  • Electronic back transfers – An electronic bank transfer is a money transfer from one bank account to another that is made through the Automated Clearing House(ACH), a financial transaction network. Although it is the safest and most trustworthy payment method, the payment processing time is longer.
  • Credit cards – Unlike cheques and ACH payments, credit cards are quick, and hence making it easier for the user to make big payments just over the phone or through an online payment gateway.
  • Wire transfer – Wire transfers are quick in processing the funds and gets it dones within hours. Financial institutions like SWIFT direct these funds transfer between the banks.  

Recurring Online Payments:

Business owners involved in B2B payment processing frequently use recurring payments. Technical advances were not available earlier to automate these payments. However, things have changed today, as it’s possible to manage recurring billing transactions automatically via EFT(ACH) or credit cards. The easiest way to manage recurring billing is through payment service providers. They take care of the entire process, from collecting the payment from the buyer to securely depositing the funds in the merchant’s account.

Discover more about Recurring online payments @Rapidcents.

Not A Rapidcents Merchant?

Rapidcents is a well-known merchant processor. If you want to enable an online payment processing system in your business, you can go with this merchant payment processor. This platform is secure and reliable. Moreover, it adds total value to every online transaction. So, join this as early as possible.

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