B2B Payment Gateway: Pros and Cons of Each Way Businesses Pay

Credit Card Payments: Pros and Cons

Credit cards have become one of the most common and convenient ways for businesses to conduct transactions and manage financial obligations. Credit cards offer a variety of benefits that make them attractive for businesses and consumers alike.

• Credit card payments are easily tracked due to the electronic or paper statements provided by the credit card issuer. That gives both sides a clear record of each payment.
• If a business pays off its revolving balance on time,it will be able to access extra funds without incurring any additional interest rates. In this way, it can be viewed as a kind of "debit card" that is paid off each month instead of accruing debt.
• Many credit cards come with added security features, such asvirtual credit cards that have single-use numbers. This helps protect businesses from cybercrime as each number can only be used once and then becomes null and void.
• Interest (APR) will be incurred if the credit card is not paid off in full each month.
• For the seller, every card payment carries a processing fee. On commercial and purchasing cards, sending Level 2 and Level 3 data with the payment can lower it (see Level 3 credit card processing).

ACH Payments (Automated Clearing House) Payments: Pros and Cons

ACH payments have become an increasingly popular form of digital payment for businesses in recent years. Unlike traditional methods of sending paper payments, ACH transactions are processed electronically and can be used to transfer funds from one entity to another using a routing number or a bank account.

• The primary advantage of using this digital method is the speed and convenience it offers, while also providing cost savings compared to other forms of payment.
• Organizations that regularly make B2B payments can benefit immensely from using ACH payments as their primary transaction type. It reduces the amount of time taken for manual processing and has a positive impact on cash flow when used for recurring payments.
• Tracking and monitoring these payments is much easier than with paper checks, and they can easily integrate into enterprise resource planning (ERP) systems and other applications.
• ACH transactions are highly secure, meaning sensitive financial information stays safe throughout the entire process. ACH usually costs less per payment than a card, and less to handle than a paper check.
• ACH is a US network; it reaches foreign bank accounts only in limited cases, through International ACH Transactions (IAT).
• An ACH payment can be returned, for insufficient funds for example, after it has been initiated.
• Due to its batch processing system, there is a daily cut-off time for ACH payments, so businesses must make sure to submit their transactions before this deadline in order to have them processed that day.

Bank Transfers/Wire Transfers: Pros and Cons

Wire transfers are a popular and convenient payment method for businesses to send and receive secure payments. As an electronic form of payment, this form of payment offers real-time transactions with quick access to funds.

• Online payments can be sent from one account to another, with no need for physical cash. In addition, bank transfers are a viable payment service for companies that make global payments.
• Compared to the Automated Clearing House (ACH) system, wire payments have the advantage of not using batches and having a faster turnaround time. When companies require funds in a hurry, they often find that wire payments have the best terms and timing.
• To ensure the successful delivery of funds via a wire transfer, it’s important for businesses to provide accurate information about the sender and recipient accounts as well as any applicable transaction fees or taxes associated with the transfer.
• Businesses should understand the regulations in their country related to sending international payments and any costs associated with foreign exchange rates if applicable.
• Some wire transfers may still have daily cutoff times.

Checks or E-Checks: Pros and Cons

Despite the significant decrease in recent years, many companies are still using checks to make B2B payments due to the need for additional security measures and data exchange.

Paper Checks

• Paper checks leave a paper trail, and some customers' AP teams still prefer them.
• They are slow to arrive and clear, have to be deposited and keyed into the ERP by hand, and are a common target for check fraud.

E-Checks

An e-check is an electronic version of a traditional paper check. It is used to make payments online, typically via an automated clearing house (ACH transaction). Instead of writing out a paper check and sending it through the mail, the user provides their bank account information, which is then electronically sent to the recipient's bank.

• E-check digital payments make transactions faster and more secure than using cash or a paper check.
• E-checks will clear faster than paper checks and typically cannot be "held," i.e., the payee can't decide to delay depositing the check at the payer's request.

Direct Debit: Pros and Cons

Much like an e-check, direct debit involves funds being removed from a checking account. Direct debit is a payment method where funds are directly withdrawn from a payer's account and transferred to the recipient's account.

• Direct debit is typically used for recurring payments, such as for bills or subscriptions.
• It eliminates the need for paper checks, cash payments, or manual processing of card payments.
• Direct debit also ensures that payments are made promptly and securely, reducing the risk of late or missed payments.

Better Cash Flow

Businesses should always consider how easy it is for customers to pay them. Payment portals are available that allow merchants to securely accept payments online via credit card or ACH/bank transfer without having to wait for checks or other paper transactions to arrive in the mail.

These solutions save time and make it easier to track payments, maximize profits, and improve customer experience by providing a smooth payment process.

Simpler Accounting

A complete B2B payment solution is an effective way to simplify accounts payable and accounts receivable, eliminating manual labor and reducing the risk of errors. By implementing this software with B2B payment features, check payments can be scanned, recorded, and stored automatically with no need for human intervention.

In addition to delivering convenience and accuracy, this type of payment solution can also integrate with popular enterprise resource planning (ERP), accounting, or bookkeeping programs.

A B2B payment system also helps businesses manage their finances more effectively by providing visibility into cash flow and tracking where money is coming in and out of the organization.

Save Time

Adopting B2B payment solutions is a great way to save resources such as time, money, and effort for businesses and customers alike. Instead of having to write and deliver checks manually, merchants can now use digital systems which automate the entire process.

In addition to saving time and money, B2B payment hubs also help simplify tracking payments from customers as well as keep an accurate record of all transactions made. This allows for better transparency in business operations along with more efficient reconciliation processes which reduce the need for manual labor that would otherwise take too much time and energy.

• Payments that post to the ERP. Each payment applies to the invoice it pays, including partial payments, one payment covering several invoices, and credits. See B2B payment processing and automated cash application.
• Card and ACH on one integration. Customers who pay by bank shouldn't need a separate system. See ACH payment processing.
• Level 2 and Level 3 card data. Commercial and purchasing cards can qualify for lower interchange rates when the invoice's line items go with the payment. See Level 3 credit card processing and Visa CEDP.
• Surcharging, where the rules allow it. Passing the card fee to the customer is limited by card-brand rules and state law, and isn't allowed on debit cards. See credit card surcharging.
• A place for customers to pay. A customer payment portal where customers see open invoices, pay several at once and save a card or bank account, plus a virtual terminal for payments taken by phone.
• Autopay and collections. Recurring payments on the due date, and reminders with a pay link for overdue invoices. See accounts receivable automation.
• A choice of gateway. Payment Hub works with 19+ gateways and processors, so you can keep the one you have. See payment gateway integration.
• Card data kept out of the ERP. Cards and bank accounts are saved as tokens at the gateway, which can reduce your PCI scope depending on how payments are taken.

Payment Hub connects to NetSuite, Sage Intacct, Acumatica, Business Central, Epicor Kinetic, SYSPRO and more; see ERP payment processing.

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