The digital payments market is expanding rapidly. As the market evolves and more cutting-edge solutions to payment processing result in quick payments, there is no question that you should take advantage of it. Digitizing your payment processes has several advantages, but first, we must clarify how they differ from traditional ones and what your possibilities are. Understanding what traits to seek in a robust payment processing system will be simpler once we have covered the basics.
What are B2B e-Payments?
B2B e-payments involve digital transactions of products or services between two businesses. They exclude conventional payment options like cash and paper cheques. Instead, the purchaser receives a digital invoice with a predetermined payment due date. The participating businesses often agree on payment options like wire transfers or credit card payments.
B2B e-Payments Methods:
Credit cards, eChecks, ACH transfers, and wire transfers are the most common B2B payment methods.
- Credit Cards: Credit cards are one of the easiest and fastest payment methods that enable companies to collect complete upfront payments. The fact that banks charge high transfer fees, which can increase significantly in B2B transactions, is a disadvantage of this payment option. For one business, 3-4% of each transaction can result in thousands of dollars in bank fees. The vulnerability of credit cards to fraud is another factor to consider. However, they remain one of the most regularly used forms of payment.
- eChecks: Since mailing paper checks to banks is inefficient, many banks now provide eChecks or processing of checks using mobile apps for quicker cash depositing. Although there are alternatives to using checks, fintech firms offer innovative banking solutions, and eChecks expects to continue to be a viable payment method for the foreseeable future.
- EFT (Electronic Funds Transfer): Compared to other payment options, EFTs are more affordable. Many organizations like this automated, quicker approach because the possibility of error is reduced. EFTs are used as an all-encompassing word to include:
- ACH
- Wire transfers
- Direct deposits
- Virtual cards
- Personal computer banking, etc.
Here, customers do their banking using computer networks. They make and receive payments on schedule, allowing commercial operations to run smoothly. Since the procedure is digital, buyers and sellers can eliminate the need for follow-up with their banks. An active bank account is the only prerequisite for EFT payments. EFTs are popular among businesses because they are a quick and easy way to process payments.
- Bank Transfers (ACH & Wire Transfer): Wire transfers and ACH (Automated Clearing House) payments transfer money through bank accounts and differ in some ways. One transaction is processed at a time by both wire transfers and ACH. While wire transfers are instantaneously processed, the money does not leave your account right once; instead, they are sent to the payee over time. The banks charging a fee for processing payments makes these payments expensive. These techniques are also the main objectives for bank account information theft.
- Payment Gateways: A payment gateway is a platform for accepting online payments to integrate with your product. Gateways contain built-in security measures that prevent information from being transferred directly from a website to a payment processor. The payment platform and the processing system must connect through the payment gateway. Once approved, money is transferred through the payment gateway and placed into the seller’s online account. Payment gateways’ ability to accept many payment methods anywhere is one of their many advantages. Different businesses can receive and process payments with them because they are easy and convenient.
