B2B Credit Card Processing: Insider’s Guide
B2B credit card processing refers to a specialized merchant processing solution that enables businesses to accept credit card payments from other businesses. This type of payment processing account generally handles high-volume transactions. Qualifying businesses get lower interchange rates due to level 2 and level 3 data processing. Wholesalers, manufacturers, B2G companies and service providers typically use B2B credit card processing solutions.
As per Straits research, the North American B2B e-commerce market size is expected to reach USD 2,514.9 billion by 2032. Businesses require highly stable B2B Credit Card processing solutions to handle high volume transactions. Not every payment processor is capable of meeting the extensive demands of B2B merchants. Specialized payment processors that have experience in working with B2B businesses should be your number one choice.
At QuadraPay, we have been providing companies with cost-effective merchant services solutions since 2016. Our team has created this guide, which will cover all aspects of B2B merchant services. We are confident that, after reading this guide, you will have all your questions related to B2B credit card processing answered. Let’s begin.
B2B vs. B2C Transactions
Business-to-business (B2B) and business-to-consumer (B2C) transactions vary significantly. B2B transactions occur when a manufacturer sells to a distributor, or a wholesaler sells to a retailer. Usually, these are bulk transactions and may also involve recurring purchases. The most popular payment methods used by B2B merchants include ACH, wire transfer, invoice payments, and level 2/level 3 credit card processing.
In contrast, B2C transactions happen between businesses and individual customers, such as an eCommerce website selling to buyers directly. B2C transactions are of smaller size when compared to B2B transactions. The overall sales cycle of B2C transactions is shorter and simple. B2C merchants believe in establishing long-term engagement with customers. The most popular B2C payment methods are credit cards, debit cards, digital wallets, cash, e-checks, and BNPL (Buy Now, Pay Later) options.
The payment processing requirements of the B2B and B2C models vary, and that is why they need specialised payment processing options. A B2C merchant can potentially get a solution from any low-risk payment processor; on the other hand, a B2B merchant will require a level 2 or level 3 payment processor that can handle significantly large transactions.
B2B Payment Solutions
For B2B transactions, various payment options are available. Businesses can make their choices depending upon the type of transaction, the volume, the jurisdiction, and the available data. Let’s explore some of the most popular B2B payment solutions.
B2B Merchant Account
A B2B merchant account is a specialized bank account used by businesses to accept payments via credit cards from other businesses. The merchant account holds the fund for a short period of time and then forwards it to the merchant’s business bank account. A B2B merchant account is customized for high-volume business transactions. These merchant accounts come with a higher monthly processing limit. Merchants get better rates on corporate card payments.
B2B Level 2 & Level 3 Card Processing
Level 2 and level 3 credit card processing is perfect for B2B transactions. By using L2 and L3 credit card processing, businesses can lower the transaction cost by qualifying for a reduced interchange rate. These solutions are perfect for all kinds of B2B transactions, including business-to-corporate and business-to-government transactions.
Specialized level 2 and level 3 credit card processing helps businesses reduce their overall cost of transaction processing; this leads to significant savings for the businesses. Such transactions require the merchants to pass on additional data to the processor. These data points include tax amount, SKU, invoice number, and item descriptions. Level 3 processing requires more data input than level 2 processing.
B2B E-Check Processing
An e-check, or electronic check, is also an ideal payment instrument for business-to-business transactions, especially for high-volume checks. It is a fast alternative to regular paper check transactions. By using eCheck, businesses can reduce the processing time and ensure a quick fund transfer.
The process of e-check transactions is simple. It starts with scanning the check through a mobile application and then uploading it to the automatic clearing house network. Post-approval, the funds are electronically transferred from the payer’s bank account to the merchant’s bank account. This method reduces the requirement for paperwork and physical check handling. For B2B transactions, electronic checks offer a faster alternative to traditional checks. It also reduces the risk of check fraud and manual errors.
B2B ACH Processing (Automated Clearing House) Processing
ACH is a payment instrument used for B2B and B2G transfers. By using ACH, businesses can benefit from a lower decline ratio compared to regular credit card transactions. ACH processing is cheaper in comparison to card transactions. The recurring billing support makes it an excellent choice for those businesses that need to process subscription payments regularly. It is a fully compliant payment instrument.
Benefits of B2B Payment Processing
Our B2B payment processing solutions offer various advantages. One of the most important benefits is quick approval. We work with well-known acquiring institutions that have years of experience in L2 and L3 processing. These processors do not waste time on unnecessary things and offer swift approvals. They often provide approvals within a 24-hour timeframe.
International payment processing compatibility allows merchants to accept payments from global clients in multiple currencies. Our B2B payment solution comes with a built-in fraud detection tool that reduces the risk of fraudulent transactions.
Another significant benefit is highly competitive rates. We work directly with acquiring institutions, and this helps us reduce the cost of any middlemen. Merchants sign up directly with acquirers after negotiating the rates. All these features position QuadraPay as a dependable provider of B2B payment solutions.
Application Process for B2B Payment Gateway
The application process for a B2B payment gateway is simple, irrespective of the size of your company. To initiate the process, simply follow these straightforward steps.
Complete the Merchant Application: The payment service provider will share an application form with you. You must fill out this form by providing accurate details. The form will ask for information about your company, such as the legal entity name, type of company (LLC, corporation, or partnership), and details of products and services you offer. Additional information that you will need to fill in the form includes estimated transaction volume, processing currencies, average ticket size, highest ticket size, and lowest ticket size.
Send in your KYC documents: You need to send the application form with KYC documents to the payment processor. Approval of the merchant account is contingent upon this mandatory step. Usually The necessary KYC documents include a business registration certificate, government-issued photo ID (such as a passport or driver’s license), a utility bill, domain registration proof, and proof of inventory. Other documents include a voided check and processing history.
Underwriting Review: The underwriting team will review all the documents provided by the merchant and then categorize the business as high risk or low risk. Based on the categorization and overall review, they will either approve the account or decline it. They will assess the monthly and annual transaction volume forecast during the underwriting process. The payment processor will assess the viability of the approved payment methods for your account. These payment methods are credit cards, wire transfer, ACH, and eCheck. Once the underwriters approve your account, you will receive a contract.
Integration and approval: After the successful approval of the account, the next step is the integration, where the payment service provider will provide you with API information. The provider will share a document explaining how to integrate the API with your website or mobile app. If you are using a content management system to manage e-commerce transactions on your website, the payment service provider will share ready-to-use plugins.
Begin to Receive Payments: After the successful integration of the gateway on your website, you will perform some test transactions. Remember that the payment service provider will share some details for test credit cards. Do not use your credit card or someone else’s credit card information for test transactions; such actions can have a suicidal impact on your merchant account.
Once you submit test transactions, the payment service provider will verify whether the process went well or not. If everything goes well, then the payment service provider will switch the gateway to live mode, and you will be ready to accept transactions from your customers.
Future of B2B Payments: The B2B payment space is changing very fast. We have started seeing a lot of automation and digital transformation in this domain. In the coming years, digital payments will increase, and the most popular instruments will be ACH payments, wire transfers, and credit card processing. Payment processes will invest heavily in developing tools powered by artificial intelligence and machine learning that will help stop fraudulent transactions. Cross-border transaction processing will become both easier and inexpensive. Merchants will be more comfortable in accepting crypto payments for business-to-business transactions.
Final Words.
With QuadraPay, you will find robust B2B payment processing solutions. You are welcome to reach out today for a no-obligation savings analysis and a merchant-friendly quote. Feel free to email us at [email protected].
