25 October 2022, 2:30 (CEST)

B2B PAYMENTS

Implementing the right payment solution for merchants


B2B payments are a pain point for all kinds of businesses. Let’s imagine a small ecommerce company — a berlin-based microbrewery selling their product on both a regular wholesale and one-off retail basis all over Europe. Without an effective payment solution, they can’t sustain revenue, maintain cash flow, pay bills, staff, or distribution costs, secure credit, or plan for growth. In short, without a smooth way to process payments, they can’t operate in today’s market.


What to expect in this blog

  • Why B2B payments are a problem for so many enterprises
  • How B2B payments are evolving
  • The importance of choosing the right B2B payment solution
  • How to choose the right payment stack

Why B2B payments are a problem for so many enterprises

While in recent years the B2C payments sector has adopted innovations like contactless cards, mobile payments, and P2P payments, many companies in the B2B space are still relying on traditional methods like invoicing. When the technology exists to pay for almost anything with the tap of a card or click of a button, it’s extraordinary to think that these are still the methods many businesses use. Yet, there are signs of improvement. In the US, the B2B payments industry’s value grew from $18.5 trillion1 in 2016 to $25 trillion2 in 2020, thanks in large part to developments like open banking.

Among the reasons companies are slower to adapt is the size of the B2B sector and the transactions businesses tend to make. As they grow, an ecommerce company like our microbrewery may supply regular shipments to supermarkets, restaurant chains, and other retailers. If they continue to use old-fashioned methods to process regular payments, they risk wasting time, inhibited cash flow, logistical complexity, and potential issues with data security. When payments are late, the picture looks even worse, with companies that rely on manual processes taking 67% more time3 to follow up on overdue payments.

What any business needs from their payments solution is a simple, quick, secure system that they can integrate quickly with their preexisting infrastructure. Fortunately, the B2B payments space is evolving to facilitate just that.

How B2B payments are evolving

The last few years have seen numerous developments in B2B payments, ranging from open banking and frictionless payments to account-to-account (A2A) payments, as well as embedded finance.
These developments help return financial control to merchants by creating:

1: Smoother and easier payments
2: Instant visibility of finances
3: Providers are paid on time and to the right place
4: Paying less late-fees
5: Reduced administration (for tasks like currency conversion)
6: Keeping suppliers and end customers happy

By removing the need for intermediaries or other payment instruments, A2A payments in particular help to eliminate friction and maintain cash flow, giving enterprises like our microbrewery the confidence to keep manufacturing products and growing their business. Another key area to consider when implementing a payment solution, though, is security. In Europe alone, fraudulent card transactions account for over €1.87 billion4 in losses. To help businesses and consumers avoid fraud and unintended mistakes, A2A payment methods include features like multi-authentication, risk engine technology, and amount limits. With built-in credit checks, merchants can also avoid failed payments due to insufficient funds or compromised accounts, which can reduce chargeback by up to two-thirds.

The importance of choosing the right B2B payment solution

HERE ARE THE QUESTIONS EVERY BUSINESS SHOULD AKS WHEN CONSIDERING B2B PAYMENTS SOLUTION
Can it easily integrate with accounting?
Leveraging API technology, the right B2B payment solution will integrate with your accounting systems to allow you to see real-time transactions.
Can it handle bulk payments?
For efficiency, you’ll need a B2B payment provider that can do multiple transactions
in one go.
Does it provide fast reconciliation?
What helps with ease of operations and accounting, where you need faster status updates and chargeback reporting to stop shipping fraud/fraudulent orders.
Is it all-inclusive?
Look out for uncapped fees! You want a B2B provider that can give the lowest total costs
for direct debit processing.
Does it comply with relevant regulations?
Above all else, you want a trusted and accredited provider to reduce the risk of fraud.
These are the key points to consider. But to ensure a truly effective approach to processing payments, it’s important to understand why B2B they pose such a challenge in the B2B space.

How to choose the right payment stack

There are clear advantages to using A2A payments, but choosing the ideal payment solution requires other considerations. SEPAexpress provides Direct Debit processing with best-in-class status updates and chargeback reporting. The fee structure is fully transparent with no hidden costs, and B2B payments are settled directly into accounts in the same way as credit card funds. SEPAexpress’ products require a minimum of personal data to help merchants stay GDPR compliant, only allow account holders to complete purchases, and perform accurate credit checks using the information available — all in an easily integrated, white-label solution that minimises set-up and administrative requirements. With our solutions, we can support up to 500 million bank accounts in 34 countries in their daily payment business.SEPAexpress, the good choice for all merchants who want to optimize their payments.

 

1 INSIDER – Toplin, Jamie (2021, 26.June): Visa is pushing further into the B2B payments industry. [online]
https://www.businessinsider.com/visa-pushing-further-b2b-payments-industry-2017-6?r=US&IR=T [28.09.2022]

2 B2B Payments and Fintech Guide 2019 Innovations in the Way Businesses Transact. [online]
https://www.europeanpaymentscouncil.eu/sites/default/files/inline-files/B2B%20Payments%20and%20Fintech%20Guide%202019%20-%20Innovations%20in%20the%20Way%20Businesses%20Transact.pdf [28.09.2022]

3 PYMNTS (2021, 30.Octobre): Firms That Rely on Manual Processes Take 67% More Time to Follow Up on Overdue Payments. [online]
https://www.pymnts.com/news/b2b-payments/2021/firms-that-rely-on-manual-processes-take-67-more-time-to-follow-up-on-overdue-payments/ [28.09.2022]

4 EUROPEAN CENTRAL BANK: Seventh report on card fraud. [online]
https://www.ecb.europa.eu/pub/cardfraud/html/ecb.cardfraudreport202110~cac4c418e8.en.html [07.10.2022]

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Sabrina Jaksche

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SEPAexpress

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D-93055 Regensburg
Germany