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Transforming A/R with Automation and Built-In Credit Financing


Posted by Michael Noble - 12 January, 2022

Areas that Credit Cards are Missing for B2B

Business-to-consumer (B2C) companies have it made when it comes to credit cards. This is because consumer transactions are frequent and typically have low dollar amounts. This makes them a low risk for credit card processors, who pass the benefit along to businesses in the form of lower credit card processing fees.

On the other side of the fence is business-to-business (B2B) companies, who underwhelming accept credit cards. In fact, the U.S. Commercial Credit Cards Market Forecast, 2016-2022: Growing at a Healthy Pace report found that in 2017, 40 percent of B2B payments were done by check. 

Credit cards are only a small percentage of overall B2B payments. Why do B2Bs avoid accepting credit cards? Mainly because of the fees.

In this article, we'll look at areas where credit cards are missing in B2B transactions, explore B2B credit card fees, and ways B2Bs can reduce them.

B2B Forms Of Payment

B2Bs accept many forms of payment but which form can greatly depend on the industry. Industries have norms such as net terms or types of payments. For example, industry A might have an average net terms of 45 days and accept electronic-check and paper check only. Industry B might have 90 days net terms and accept paper check and ACH as payments. Each business within an industry is aware of its norms and don't deviate much from them. Otherwise, customers may end up going with someone who does follow the norms.

Transaction amounts for B2Bs are far larger than B2Cs. For example, rather than a $100 ticket that you'll find with B2C transactions, B2Bs can have tickets that are $10,000s. Such large purchases can be risky for credit card processors, which drive up transaction cost for B2Bs. This is one of the main reasons credit cards are used for the majority of B2B transactions.

building your credit(source)

In addition to paper checks and ACH, B2Bs also use electronic checks, electronic funds transfer, and online payment platforms (via ACH). Offering multiple payment options is all part of building a great relationship with customers, a requirement for any B2B.

B2B Is A Relationship Game

B2Bs build a pipeline of leads and nurture the highest potential leads into (hopefully) customers. The time from lead to a customer can take months. Once a lead becomes a customer, the nurturing doesn't stop. B2B is all about building long term relationships.

Part of the relationship building process is extending great terms and discounts to customers. For example, some customers may receive 60-day net terms instead of an average of 45 days. For early payment, they may get a 1.5% discount instead of 1%. B2Bs also work to customize their payment options for customers with some customers paying by paper check and others by ACH. There can be more options. It all depends on the business and the client.

Whereas B2C is transactional based and the business may never see the customer again, B2B is just the opposite. Those B2B relationships don't come free though. It takes much effort and time to build a long-lasting and trusting relationship.

Customers use credit cards in B2B purchases because it's:

annual feeCredit payments(source)

B2B Credit Card Fees

There's no denying the convenience of accepting credit cards, even for B2B. The larger issue for B2B credit card payments comes in the form of fees. B2C credit card processing fees are just under 3 percent. B2B fees can be 1 to 2 percent more. These fees include the credit card processing fee plus interchange fees. Additionally, there can be fees for credit card processing software and hardware.

When you consider a $50,000 or $100,000 purchase, 4% is no small fee. These high costs all but eliminate credit cards from the B2B payment options picture.

Reducing B2B Credit Card Fees

There are ways for B2Bs to reduce credit card processing cost. One is to acquire level 3 processing. B2C uses level 1 processing, which is the highest level consumer cards are eligible for. Next is level 2 and 3. Going from level 1 to 3 means collecting more data. Below are the differences in data collected between level 2 and 3, which varies by the credit card processor.

bonus points

Level II

  • Merchant DBA name
  • Tax ID
  • Tax amount
  • Billing zip code
  • Invoice number
  • Order number

Level III

  • Freight/shipping amount
  • Item ID or SKU
  • Item description
  • Unit price
  • Quantity
  • Discount

Nacha.org list a few examples of savings from level 3 processing.

Another method to reduce processing cost is to negotiate rates on interchange fees. There's no guarantee that you'll get a reduction but it is certainly worth pursuing, especially if you are a large customer of the credit card processor.

Last but not least is to surcharge customers. Especially for larger transactions, surcharges can result in significant savings. Keep in mind that there are strict rules to follow when it comes to surcharging. 

Scott Blakely, Esq., is a principal with Blakely LLP, where he practices creditors’ rights mentioned in an interview with nacha.org, "Debit cards may not be surcharged. Cards processed outside the US may not be surcharged."

If you want to read more about B2B surcharging rules, nacm.org has a great outline on the topic.

Virtual Cards - The Future?

Virtual cards are quickly catching on in B2B. These are non-physical cards derived from accounts receivable and are represented by a token.

"Issuers continue to enhance solutions to issue/approve virtual cards from mobile form factors, and corporate travelers become more comfortable with mobile wallet capabilities from the ‘Pays’ (e.g., Apple, Google, Samsung), banks, and merchants," said Frank Martien, managing director for payments research in North America, as reported by Digital Transactions.

recent report from Accenture found that "Virtual card spend for purchasing activities is projected to grow at 19 percent annually due to buyer commitment, improved connectivity and enhanced supplier acceptance, with further growth potential as traditional boundaries blur."

While credit cards may not be widely used within B2B, times are changing, and technology is transforming how B2B pays. Like most things in B2B, larger acceptance of credit cards and their various forms, such as virtual cards, will take time. The result will be overall growth in B2B as companies realize new customers and more revenue from new forms of payment.


  • Credit cards are only a small percentage of overall B2B payments
  • Building a relationship with your buyers is so important, because some of them will be lifelong buyers
  • Level II and III credit fees can really hurt your business if you don’t look at them correctly
  • Virtual cards are all the talk right now, and the future of credit be changed from it

Net terms accounts receivable


Topics: Finance, Credit, extending credit


Apruve enables large enterprises to automate long-tail credit and A/R so you can stop spending 80% of your time and resources on 20% of your revenue. We partner with each of our customers to solve their unique credit, payment, and accounts receivable challenges and build the right credit solutions for your markets, customers, and goals. 

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