According to the BI Intelligence report, despite reaching approximately $18.5 trillion in volume and vastly outpacing B2C (business-to-consumer) and C2C (consumer-to-consumer), B2B payment processing still lacks the level of innovation found in the previous two realms. In large part, this is due to the complex nature of B2B payment processing that forces merchants to use analog as opposed to digital tools.
But what makes it so complicated? Let’s look at the typical stages a B2B payment has to go through before it’s complete. For this example, we’ll look at a typical transaction conducted between a store and its supplier: 1. The store submits an order to the supplier. 2. The supplier receives the order and generates an invoice. 3. The store gets in touch with the supplier to verify the details of the invoice. 4. If the invoice is accepted, then the store sends a check to the supplier. If the invoice is declined, however, the process has to start all over again. 5. The delivered check is submitted to the bank.
The actual stages of the process may seem rather straightforward, but the true complexity of B2B credit card processing lies in its timeline and methods. Between invoice generation, subsequent confirmation and the payment processing itself, it can take anywhere from one to three months, which also depends on the acceptance or decline of the invoice.
The methods used aren’t really helping to speed things up either. Although some elements of B2B payment processing have experienced partial innovation, it only made the process more fragmented by forcing analog and digital elements to coexist in the same ecosystem, which in itself is problematic.
In order to streamline the entire process, each step needs to be digitalized. Although there are solutions available that can help accomplish this goal, many of them are simply unaffordable for small and medium-sized businesses. Considering that these businesses make up the backbone of the U.S. economy, this unfortunate fact alone could be responsible for B2B credit card processing falling behind its B2B and C2C counterparts.
Good news is that fast and simple doesn’t always have to be expensive — see if our B2B credit card processing solutions are right for your business.
Table of Contents
B2B Payment Processing: How Are B2B Transactions Different?
The complexities of business and corporate payment processing are much different than consumer credit card processing. Let’s take a look at some of the areas that make B2B payment processing different, but also more secure.
Depending on the amount, type of cards and specific information required to successfully run a transaction, credit card processing is assigned to one of the three levels. B2B credit card processing typically falls into either level 2 or level 3 credit card processing, while consumer credit card processing is grouped into level 1. The main difference is the amount of information collected at the time of transaction.
Level 2 Credit Card Transactions
To process B2B credit card transactions at level 2, you could be asked to submit any or all of the following pieces of information:
- Credit Card Number
- Expiration Date
- Billing Address
- Zip Code
- Invoice Number
- Customer Code (also known as a purchase order number)
- Sales Tax
Level 3 Credit Card Transactions
The entries required for B2B payment processing at level 3 include items from the previous two levels combined with additional, more granular information. Here are some examples of what you can expect:
- Transaction Amount
- Tax Amount
- Customer Code (also known as a purchase order number)
- Zip Code
- Merchant Minority Code
- Merchant State Code
- Ship From Postal Code
- Destination Postal Code
- Invoice Number
What Is the Difference Between a Terminal and a POS (Point-of-Sale) System?
A terminal is a stand-alone device that communicates securely with TransNational Payments, a merchant services provider, enabling you to process credit card transactions through your merchant services account. POS systems often have a terminal built in to support B2B payment processing, but offer additional features such as menus, sales reporting and analytics, customer management, employee management and inventory management.
Read more about POS systems.
What Is the Difference Between a Virtual Terminal and a Payment Gateway?
A payment gateway links a system used by a business for the purposes of B2B payment processing (like a POS or shopping cart) to a credit card processor.
A virtual terminal is a way for business owners to process transactions on their own via the internet. In addition, virtual terminals provide business owners the ability to refund and void transactions, as well as, manage reports, analytics and customer databases. A payment gateway can have a virtual terminal built into it and vice versa.
For more information on online payment processing, click here.
What is PCI Compliance?
PCI compliance is a voluntary measure you can take to ensure that your account and your customers’ information is protected from attack by fraudsters, hackers or other malicious parties. TransNational Payments can assist you in becoming PCI compliant to ensure you are covering all of your bases – do not open your business or your B2B payment processing up to threats.
What Technologies Support B2B Payments?
Many diverse kinds of technology support B2B Payments. That’s because B2B payments require increased security while maintaining user-friendliness and flexibility to a level that B2C payments (business-to-consumer) and P2P payments (peer-to-peer) just don’t require. Here are some of the B2B payment softwares, devices and services that support B2B payments processing today.
1. Mobile payment processing
When you take payments mobile to support many of your business to business payments, you unlock a world of benefits. You can collect B2B payments at the time of delivery using our mobile POS, NFC mobile payments and EMV mobile payments options.
Learn more about TransNational Payments’ mobile payment solutions for B2B payments.
2. Payment gateways
A payment gateway — generally an online cloud-based platform that unifies your business operations and lets you accept online payments — make complex B2B payments simple. Its variety of features and payment gateway services make it a necessary component of B2B payments. Most gateways allow you to accept, request or send payments via ACH and eChecks; invoicing; mobile gateway; virtual terminal; recurring billing; secure payment link generator for email or web; online shopping cart and more.
Learn more about TransNational Payments’ payment gateways for B2B payments.
3. Check services
Checks are still the top way that most B2B companies send and receive payments. While paper checks are widely thought to be the easier and cheaper way to process B2B payments (offering more float time too), electronic B2B payments actually offer a ton of benefits including reporting; payment tracking; invoicing; recurring billing; same-day payments and next-day payments; and much more.
Learn more about TransNational Payments’ check services for B2B payments.
4. Credit card processing services
Accepting and sending B2B payments using credit card processing services tends to make sense for a lot of B2B companies. B2B payments credit cards are convenient for purchases, offer security and protection against chargebacks and fraud and offer B2B companies a reliable source of credit.
Learn more about TransNational Payments’ credit card and debit card processing for B2B payments.
5. Wire transfers
Wire transfers also make B2B payments possible — but are often the most expensive method for B2B companies to send and receive funds. Wire transfers usually charge a transaction fee for both the B2B payment sender and recipient. Wire transfers also provide B2B companies fewer protections should a payment fail.
Learn more about TransNational Payments’ B2B payment solutions.
Does It Matter Which Online Payment System a B2B Business Uses?
Yes! B2B companies have to communicate trustworthiness throughout every step of the business deal, especially at the finish line (a successful B2B payment). You will inspire more confidence in potential clients (and reinforce your professionalism with current suppliers and buyers) when you choose an established, highly rated online B2B payment system. While it may not seem like the easiest solution, choosing the right online payment system will pay off in the long run. You’ll attract more businesses with your streamlined payment process and get your funds faster too.
To choose an online payment system for your B2B business, look for the following:
- Clear and transparent pricing
- Comprehensive payment gateway services
- Brand identity customization
- PCI DSS compliance
- Level 2 and Level 3 security features
- Exceptional customer service
What Are Some Inexpensive B2B Payment Providers?
Inexpensive B2B payment providers make it easier for B2B companies to make secure payments, receive funding quickly (even same-day B2B payments) and lets merchants focus more on maintaining business relationships and creating new B2B opportunities.
TransNational Payments is an inexpensive B2B payment provider because we offer transparent and advantageous Interchange Plus pricing. Interchange Plus pricing is one of the best payment processing price structures B2B companies can count on.
Inexpensive B2B payment providers will still offer the best rates, key features and helpful services for B2B companies. TransNational Payments embodies this by offering affordable and top-quality services for B2B payments like eChecks, ACH services, Full Service Payroll, recurring billing, invoicing and mobile payments.
What Are Some Online Payment Gateway Solutions for B2B?
There are many online payment gateway solutions built to make B2B Payments simple and easy to track. These B2B solutions include:
- Virtual Terminal
- Recurring Billing
- Product Inventory Manager
- Online Payments
- Online Shopping Cart
- Reporting & Tracking
- Customer Vault
- Mobile Payment Gateway
- ACH & EChecks
- QuickBooks Desktop integration
- QuickClick Secure Payments Link
- Mobile POS
- Mobile NFC Payments
- Mobile EMV Payments
How Are B2B Payments Generally Done Between Partners?
When businesses partner up to achieve growth, increase cash flow and create new business opportunities, it’s crucial that both parties choose a business payment solution that works seamlessly for both partners. B2B payments between partners should be fast, secure and reliable. Some B2B payment solutions for partners are ACH and eCheck services; mobile payments; payment gateway services and more. Perhaps the most crucial element of setting up B2B payments for partners is ensuring that the B2B payment solution can securely support Level 2 and Level 3 transactions.
Understanding How Level 2 and Level 3 Credit Card Processing Works for B2B Payments
Level 2 credit card processing works similar to Level 1 credit card processing. However, the higher the levels you go when accepting payments, the more information is required in order to process. With Level 1, card data is typically associated with consumer transactions.
With Level 2, you’re most likely a B2B company or corporate business that requires information such as customer codes, tax amount, tax identification and more.
With Level 3 credit card processing, you’ll need all the same information as Level 1 and Level 2, with an additional capture of specific line item data. That data includes invoice numbers, tax amounts, item descriptions and more.
Do Level 2 and Level 3 transactions cost extra?
No, typically. Level 2 and Level 3 card data often qualify for lower interchange rates with Visa and MasterCard.
Why are Level 2 and Level 3 transactions more secure? Why is Level 2 and Level 3 processing better for B2B payments between partners?
B2B payments that utilize Level 2 and Level 3 processing are typically more secure because they require an extra level of information in order to process the B2B transaction. This reduces the chance of any potential fraud or chargebacks to your business.
What Are Some Good Alternatives to Stripe?
Good alternatives to Stripe are B2B credit card processors that allow B2B companies to accept credit cards, use mobile payments, generate and send invoices, and help businesses maintain PCI compliance and secure Level 2 and Level 3 credit card processing, among many other key features.
TransNational Payments is one of the best Stripe alternatives. We offer recurring billing, easy PCI compliance features, mobile payment apps and card readers and affordable payment gateways. We give you a 45-day free trial of our best B2B payments services and products so you can choose the B2B payment processor that’s best for your business.
What Is the Best Online Payment Gateway for E-Commerce?
The best online payment gateway for ecommerce B2B companies is one that’s built to deliver on the many benefits of creating a B2B online store.
Besides selecting an online payment gateway for ecommerce that accepts all major credit cards and connects to a mobile solution, look for a B2B payment gateway that includes:
- Native shopping cart solutions
- 175+ shopping cart integrations
- PCI compliance and security
- Fraud prevention tools*
- Flexible payment API for maximum control over your checkout process
- Customized settings for your brand identity
- Online dashboard so you can monitor all locations
- 165+ processor connections
- Search transaction feature
*Card-not-present transactions account for about 50% of all fraud losses. This is a big risk and a huge blind spot that B2B companies can’t afford to miss.
What Technologies Exist in Mobile Payment Industry?
Key technologies that exist in the mobile payment industry include:
- What are mobile wallets? Here are some examples: Apple Pay, Android Pay, Samsung Pay, etc.
- AKA: Mobile NFC payments, contactless payments, touch-to-pay services, tap-to-pay
- Examples: Mobile EMV card reader, card reader for mobile NFC payments, mobile payment app, mobile swiper, USB card readers, iPhone card readers, Android card readers, etc.
Peer-to-Peer (P2P) Payment Services
- What are P2P payments? Here are some examples: Venmo, Zelle, PayPal, Square Cash, etc.
Tokenization & Encryption
- Examples: Contactless payments, digital wallets, EMV chip cards, mobile NFC payments, etc.
- Read more: Encryption vs. Tokenization: What’s the Difference?
TransNational Payments supports all of these mobile payments technologies! Browse your mobile payments options.
B2B Payment Processing: How Do Electronic Payments Work?
What is an electronic payment within B2B payment processing?
Within the world of B2B payment processing, electronic payments are what allows B2B companies to pay for products or services without using cash or traditional checks. Today, it’s hard to imagine a world without electronic payments, especially for guaranteeing simple B2B payment processing.
Even if your B2B company is not planning to invest in e-commerce specifically, it’s still important to understand how B2B electronic payments work. Electronic B2B payments play a huge role in today’s secure and fast payments between small businesses, global corporations, B2B vendors, wholesale companies and more that make up the B2B network.
Electronic payments are usually powered by an electronic funds transfer (EFT), which is the method of transferring funds from one bank account to another. There are different electronic payment methods with unique pros and cons for use in B2B payments. Some common B2B payment methods via EFT include ACH payments, also know as direct deposit, eChecks and online credit and debit card payments.
Are electronic payments secure for B2B payments?
You can keep sensitive B2B payment information secure by making sure your electronic payment solution supports Level 2 and Level 3 payment processing. You should also ensure your electronic payment system is PCI compliant. Look for payment gateways, ACH and eCheck services, mobile apps and more that meet the Payment Card Industry Data Security Standard (PCI DSS), which sets a list of requirements for payment processors to securely accept, store payment information and process B2B payments.
How do electronic B2B payments benefit your business?
You’ll reach new B2B customers and expand your target market because you won’t be bound by funding delays, snail mail or mismatched payment capabilities with your customers. You’ll also improve your B2B company’s trustworthiness and Increase payment security for safer transactions with all of your clients, protecting you and them from data breaches, fraud, chargebacks and more payments pitfalls. Finally, you’ll receive funding faster and improve your tracking and reporting, business health and recordkeeping thanks to electronic payments capabilities like online invoicing, recurring billing and more.