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How Does B2B Payment Processing Work?

In case you missed our article on How Payment Processing Works, we suggest heading back to that article first, because B2B (business to business) payments are not too dissimilar from B2C (business to consumer) payments! Whether it’s cash, credit cards, or electronic funds transfers, the main differences lay in who is paying who, and how.

B2B Payments vs. Consumer Payments

The main difference between B2B and B2C payments is who is paying who. In both cases, businesses are getting paid, but if the customer is another business, then it is known as a B2B relationship.

When businesses go about paying one another, it is usually different from the traditional “check-out” experience consumers are used to. Businesses are often dealing with large orders for example, and don’t typically visit the physical location or store front (if there is one) of the business they are dealing with to make a payment.

Top 3 Ways For Businesses to Pay Each Other

  1. ACH
  • A form of electronic funds transfer, ACH (or PAD in Canada) is a bank to bank payment which uses a business’s or customer’s financial institution information to make a direct payment to a business for a product or service. The fees are lower than credit card processing fees, but ACH payments take longer to process; usually between 1-3 days.
  1. Credit Cards
  • Credit cards are not just for individuals, but are an incredibly useful tool for businesses. Making big purchases is easy with credit cards, as you don’t need to deal with a large amount of cash or wait for a cheque or ACH payment to clear. Credit card payments are instantaneous, and can be done online through a payment gateway, or processed over the phone.
  1. Cheque
  • The good old-fashioned cheque is a tried and true payment method for businesses, and though the word on the street is that cheques are going the way of the Dodo; many businesses still insist on using them, and they don’t appear to be going away just yet. The downsides with cheques are rather obvious; they take a while to send and process and you need to hope that when you give another business a cheque that they deposit it in a timely fashion—otherwise, you could end up with cash flow issues.

Recurring Billing For B2B Payments

Recurring billing is very popular among business owners transacting with other businesses. An example of businesses needing recurring payments would be when wholesalers or contractors order supplies on a regular basis. Recurring billing can be done in different ways, and in the past, it was not automated. 

Today however, recurring billing can be done electronically and via EFT (ACH/PAD) or credit card. All your business needs to set up a recurring billing cycle with another business is the purchasing business’s credit card or banking information. Using a payment processing software, once a billing date is agreed upon, you can simply set it and forget it.

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Our in-house team of Merchant Experience Specialists are here to share their knowledge, answer your questions and point you in the right direction. No commissions, no pressure.

New to accepting card payments? Many of our merchants are first time business owners who are unfamiliar with the industry. We take the time to help you understand how it all works as well as how to avoid common pitfalls.

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