The average American consumer doesn't think twice about using credit cards. Most shoppers are prepared to pay interest rates in exchange for short-term loans. Plus, for those who don't carry a balance, it's possible to avoid credit card fees altogether.
As a merchant, you aren't so lucky.
Every transaction results in an extra charge of 2 percent to 5 percent. Not surprisingly, many businesses avoid accepting credit cards when selling B2B. Why voluntarily take on extra fees when there are so many cheaper payment options?
This is why credit card use represents less than 10 percent of all B2B transactions.
However, there are times when using plastic is the better alternative — despite the extra fees involved. Below are four of the most common reasons why some businesses prefer using credit cards.
1. When Payment Processing Speed Is Essential
Although there are cheaper payment options out there, credit card approvals take only a few seconds to complete. This can be a huge advantage if verification speed is an important part of your business.
- Imagine a delivery truck that can't unload its cargo until payment clears.
- Or a hospital that desperately needed life-saving equipment yesterday.
In situations like these, speed is more important than cost, and you’ll happily pay a premium to reduce the paperwork.
Sometimes the urgency isn't even that great. You simply want better cash flow management so you can cover immediate costs and reduce days sales outstanding (DSO).
2. When Data Integration Is Important
Sometimes speed isn't your focus. Convenience is — and by accepting credit card transactions, you can more easily integrate these payments into your accounting, CRM, or ERP systems. When a new transaction occurs, that purchase is automatically captured, logged and updated within one single platform.
Yes — you end up paying higher transactional fees for this convenience. However, you also save on employee hours, paperwork and manual entry. Depending on your business, data integration can end up paying for itself. As an added bonus, this level of integration can also improve your marketing efforts, simplify reconciliation, and make tax preparation much easier.
3. When Data Security Is Critical
Popular B2B payment options like ACH and wire transfers provide direct access to corporate bank accounts. This type of exposure makes some businesses very nervous.
Credit cards can still be compromised, but they come with advanced security features. What’s more, they also typically provide liability coverage to protect you from fraudulent charges.
4. When Business Growth Is the Goal
More established businesses often avoid using credit cards for B2B transactions whenever possible — but many newer companies rely exclusively on plastic. This is especially true amongst web-based startups.
Although the fees are still there, these online businesses want the same convenience that consumers enjoy with their own cards. By not accepting cards within your payment environment, you might be missing out on potential business. Rarely will you be worse off by introducing more payment options to your clients.
Should You Accept B2B Credit Card Payments?
There are compelling reasons why every business should accept B2B plastic. If you’re still hesitant though, you can always roll out this payment option in stages:
- Try it for a month with a few select clients.
- Do a cost/benefit analysis.
- Scale up or down as necessary.
If you have questions about incorporating B2B credit card options into your business, schedule a free consultation with our payment support team today.