What is the Difference Between B2C and B2B Payment Processing?

Why Can’t we use the same payment processing system for B2B payments that we’ve been using for B2C payments?

It’s a common question every business asks when they’re shifting to the B2B industry. Well, you can’t provide a better customer experience to the users if you use the same payment processing system for both industries.

 

Understand the Basic Difference

 

You don’t deal with the same type of clientele in both industries, do you? Then how can you use the same payment system for these industries? In a B2B business, the customers order a huge quantity compared to a B2C business. Unlike the B2C industry, businesses order products and services more frequently.

So, they prefer working with businesses that offer more comfort and convenience. There are many other differences that define why you should use a separate payment processing system for these industries. Learn about B2B Payments for Retail.

 

What is the Difference Between B2C and B2B Payment Processing?

 

Payment Size

 

Are you expecting to receive the same size of orders in the B2B industry as you receive in the B2C industry?

Obviously, not. In fact, that’s one of the major reasons why you’ve decided to shift to the B2B industry. It means the payment size is also going to be bigger in this industry. According to official stats, an average B2B payment is around $30,000-$40,000 while an average B2C payment is around $40-$60.

Therefore, you need a different type of payment processing system to complete these transactions. These businesses use credit cards with higher limits to pay other businesses. And you can only accept these payments if you have a compatible system available.

 

Quantity and Frequency of Orders

 

In a B2B business, the clients order larger quantities compared to the B2C industry. An individual only orders products and services for personal use while a business orders products for their entire team. So, they often expect to receive a significant discount on such kinds of purchases.

Unfortunately, you won’t be able to meet their expectations if you’re using the same processing system that you were using for the B2C businesses. Yes, you can reduce your profit margins to attract more clients. But why would you make such a compromise when you can get these benefits by using a relevant payment processing system.

The payment service providers reduce transaction fees for businesses that are dealing in the B2B industry. So, the fellow businesses will prefer using your services if you could offer the discount according to their expectations.

 

Payment Terms

 

In a B2C business, the customers pay the price at the time of making a purchase. And sometimes, they make a payment in advance to receive a particular product/service. But that’s not the case with a B2B business. In this industry, the clients don’t pay the amount in advance.

The supplier needs to send an invoice along with the products/services ordered. The buyer releases payment once they’ve received the product/payment terms are met. The process of approving invoices is also quite lengthy. The AP needs to conduct detailed paperwork before approving payment. So, the businesses need more time for sending and receiving payments in the B2B industry.

 

Decision Making

 

An individual customer needs the products or services for their household. So, they can instantly make a decision for buying a product/service from a business.

On the contrary, the B2B businesses have an entire team for making these decisions because these decisions are going to impact the business in multiple ways. They may spend plenty of time looking for the right service provider. And the negotiations also take more time in the B2B industry.

 

Supply Chain

 

In a B2B business, the buyer can purchase the products directly from the manufacturer or from a wholesale supplier. In both cases, the end-user is the company. In a B2C business, the buyer only purchases products from a retail store because they only buy the products for personal use while the b2b businesses buy products in bulk.

 

Conclusion

 

The B2C and B2B business models are quite different from each other. Therefore, there is a clear difference in the payment processing of both industries. In this article, we’ve tried explaining the difference between B2C and B2B Payment Processing. If you’re in need of a suitable B2B or B2C payment system for your business, feel free to contact us. Beyond Bancard has year of experience on both B2B and B2C.