This blog comes as a guest post from John Rampton, CEO of Due.com. John Rampton is an entrepreneur, investor, online marketing guru, and startup enthusiast. He is the founder of the online payments company Due. Follow John on Twitter at @johnrampton.
It’s estimated by Forrester that B2B eCommerce sales will top $1 trillion by 2020 and account for 12% of all B2B sales. If you want to capture a piece of that gigantic pie for your company, then it’s time that you find a proper payments solution. Since the idea of ensuring that your customer can easily buy your product or service—over someone else’s—may seem like an overwhelming task, we’re breaking it down with these 7 considerations when choosing a B2B payments solution.
1. Payment float
In its basic definition, payment float simply means payments that have yet to clear as they are transferred from one bank to another. In the past, this process took several days to clear. For company-written checks and credit or debit cards, this could even take weeks to clear, even though the funds have been posted immediately.
With ACH or wire transfers, payments can occur in much faster. This is important because you can have access to funds more quickly, without floats—in turn, increasing your cash flow.
Because efficiencies like Same Day ACH, etc, have sped up payments, you want to look for a payment solution that has little or short payment floats.
2. Process or effort
You also want to consider the effort that the payment process will take when looking for your payment solution. For example, when accepting checks, there would be a high effort since you or an employee would have to manually input the check and its numbers into your Accounts Payable System, etc. Additionally, wire payments aren’t commonly preferred in B2B payments because the effort is high and involves setting-up a complex system.
With ACH, credit cards, and digital wallets, effort is minimal because payments can be handled automatically. Setting-up the system is also easy to implement. Even if you’re not tech savvy, the leading payment solutions, like Dwolla, are simple enough to implement in just a few clicks, steps, or API endpoints.
3. Payment cost and fees
There are a number of payment solutions that include high transaction fees and hidden costs. These can include;
- Getting charged “Bill Backs.” A Bill Back is a newer model that prices a credit card transaction fee. It’s a type of a variation on the fee model called, “the interchange plus pricing.” Often is seems you will be charged one interest rate, but then the next month you’ll get hit with a higher rate.
- The different rates for the various ways that you process payments. For example, accepting a credit card may be higher online because there are higher incidences of fraud with online payments— costs go beyond just the transaction fee.
- A separate gateway fee on top of the standard transaction fee.
- Monthly, registration, and processing fees.
Even if a solution offers low transaction fees, which is promising on the surface, there could be hidden fees in the fine print. You want to find a solution that not only has competitive fees and costs, but one that is also transparent. Our platform Due charges a flat 2.7 percent transaction fee for processing credit cards. However, as our B2B payments solution, when a Due transfers using Dwolla there is no cost to send or receive money—rather we pay them a consistent monthly amount.
Make sure that your finance solution doesn’t limit the amount you can process. This may not be a concern when you’re just starting out in your business, but as your business grows, having these limits can be frustrating and will slow your growth. Find a B2B payments solution that will scale nicely as you grow.
Having a payment system that is easy to set up is essential. Payments are a complicated process, so you want something that makes setting up as simple as possible.
As mentioned earlier, many modern payment solutions are easy to implement in just a few clicks. That’s because these cloud-based solutions contain templates that allow you to start accepting payments without tinkering with any code.
There are also open-source solutions that allow you customize the payments platform based on your specific needs. If you have an in-house developer or the budget to hire a freelance developer, this would be the direction you will want to go for a customized solution, but be sure you choose a provider with a sophisticated and up-to-date API.
Security is a major concern whenever accepting and receiving funds. In fact, security isn’t just a perk, it’s a necessity for both parties involved.
To ensure that there is little risk, make certain that the payment provider you select provides data encryption and meets all the necessary security requirements for its industry and payments type.
If the solution comes with tokenization technology, then you can enjoy added comfort that there’s an extra level of security.
7. Customer service
We live in a global community where customer service is the expectation, not a luxury. That’s why it’s important that you have a platform that provides outstanding customer service. Quality customer service for a B2B payments platform means getting quality answers when you need them, with sufficient detail and insight.
As the market for B2B sales continues to grow, choosing the right payments provider will become all the more important to differentiate your product. With Dwolla’s API, integrating ACH payments into your platform and enabling new efficiencies are easier than ever.
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