Throughout the B2B world, the shift toward eCommerce is in full effect — and many companies are cashing in huge.
While adoption had been steadily increasing pre-pandemic, the global shutdown sped things along quite a bit. In fact, 62% of B2B vendors say their eCommerce sales grew by 25% during the first year of the shutdown.
With this shift toward eCommerce comes an increased focus on payment options and methods.
(After all, you can’t make sales if you can’t process transactions…right?)
That said, we’re going to take a look at eight of the most common B2B payment methods used in the eCommerce world today. As we go, we’ll discuss the pros and cons of each in turn.
Our goal:
To help you determine which B2B payment options are best for your audience, and your business.
Let’s dive in.
Trade credit is a staple of the B2B world — with 52% of vendors offering some form of net terms to their customers.
Trade credit is just that: A line of credit offered to buyers by the B2B vendor. Typically, trade credit is offered in 30-, 60-, or 90-day terms. This means buyers will have up to 90 days to pay off their balance in full.
While many B2B vendors offer trade credit independently, others outsource the process to credit management companies to save time and to mitigate risk. That said, most underwriters will only partner with established companies whose clients are in good financial standing as a way to mitigate risk on their end.
(Especially considering the continued impact and uncertainty the pandemic is bringing to the B2B world.)
Credit cards are another staple of the B2B eCommerce world (and the eCommerce world, as a whole).
As things stand, a full 95% of B2B companies allow their customers to pay via credit card. And roughly half of all B2B buyers use credit cards for business purchases.
Below: What payment methods do you offer to your business customers?
Buy Now, Pay Later (BNPL) was made popular in the B2C world by companies like Klarna, Affirm, Sezzle, and AfterPay.
Now, Credit Key is available in the B2B realm — and it’s quickly becoming a preferred alternative to net terms, for both buyer and seller. This term recently, has been very popular in B2B and misleading. BNPL refers to a unique payment method outside of current B2B payment options, like net terms, trade credit, and equipment financing/leasing.
Here’s how it works:
Going this route, buyers will have up to 12 months to pay off their balance — a much longer period of time than the traditional net30-60-90.
As with any payment option, you need to match your customers with the preferred payment method. Here are a couple of problems that may arise if they are not matched correctly.
Bank-to-bank electronic transfers make up a bit more than one-third of all B2B transactions.
The process is pretty straightforward:
The customer provides their banking information at checkout, which sparks an automated process of payment authorization, approval, and transaction. Payments are deducted immediately from the customer’s bank account, and deposited into the vendor’s account soon after.
Good, ol’ fashioned paper checks are still offered by over 80% of B2B companies today — and are still used by 81% of B2B customers, as well.
Even in eCommerce, paper checks continue to be relevant for B2B companies. As PYMNTS suggests, we may soon see a sort of “renaissance” in this area, with third-party check processing companies emerging to help vendors handle physical checks while operating on a digital playing field.
Wire transfers are another relatively common payment option offered by B2B eCommerce companies.
Similar to ACH payments, wire transfers are processed automatically and electronically once a sale has been made. Wired payments are also transferred immediately, as well — meaning you’ll likely receive payments within a span of hours rather than days.
Though not exactly conducive to the eCommerce experience, buyers can also complete wire transfers in-person in certain cases. This can potentially be a good way for companies to help their less tech-savvy customers bridge the digital divide.
While not exactly a popular eCommerce payment method for US-based B2B companies, cash is used quite often in India and other developing countries.
The process is self-explanatory: The buyer pays the vendor in cash, either before or after the vendor’s services have been rendered.
For local small businesses, allowing cash payments can be another way to bring your non-digital customers into the world of eCommerce.
Truth be told, crypto-based payment options aren’t exactly catching on in the B2B industry.
(Really, only about one-third of B2B companies are even considering adopting it as a payment method as of late 2021.)
That said, the future is uncertain — so you’ll at least want to keep crypto on your radar in the years to come.
Okay, so it’s pretty clear that some payment methods are more popular than others.
And, speaking rather broadly, it’s probably a good idea to look first to the mainstays of B2B eCommerce — that is, ACH, paper checks, and credit cards.
But, take that with a grain of salt. The fact is, determining which payment methods to offer your B2B customers depends entirely on your circumstances.
Most importantly, you need to know which ones your customers expect you to offer — and which ones would benefit them the most. Do they need longer terms? Faster transactions? Easier processes?
(Or, perhaps, a combination of all three?)
Then, look inward. Which payment methods can your company support? How about in the future? What will adoption of a new process look like for your team?
From there, you can identify which B2B eCommerce payment methods will be easiest to implement — and that will bring the most business to your site.