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B2B payments explained
B2B payments refer to transferring money from one business to another. For example, this might be when a restaurant has to pay their vegetable supplier, or a supermarket hires a cleaning service. These types of payments differ from B2C (customers buying goods and services) because the transaction tends to be larger and occurs with frequency.
Also, the stakes for B2B payments are much higher. If something goes wrong, it can affect a business's cash flow and potentially halt operations. Therefore, B2B payment systems are automated and require higher levels of reliability.
Types of B2B payment methods
Various types of B2B payments are worth knowing about to choose the best option for your business. In this section, you will find an overview of the most commonly used methods to figure out where to get started with B2B payments.
Checks
For the most part, checks are not used by many businesses, but it is a trusted alternative when digital options fail.
Checks are relatively slow since they need to physically travel from one address to another and then be cashed.
In addition, businesses may choose to do this in batches at the end of the week, further slowing down the money transfer process.
However, paper checks are a safe transfer method not subject to the same hacking problems as alternatives.
ACH payments
Automated clearing house payments are a secure and fast method of transferring funds between businesses.
They work by routing the money between an international banking system.
They are effective and reliable, so it is a good choice for recurring B2B payments.
Also, ACH payments are easy to track, which means they are great for managing cash flow.
Wire transfers
Wire transfers are a safe but expensive method of sending money internationally.
They cost $20 to $50 per transfer and take 2 to 7 business days to process.
However, the fixed transfer cost is negligible when sending a large amount of money.
We recommend you choose a specialist money transfer service to cut costs and reduce the transfer time.
Services like Wise and XE are some of the industry leaders that facilitate B2B transfers.
Credit cards
The vast majority of businesses settle accounts using credit cards because it is a convenient, fast, and widely available method.
Credit cards provide the same advantages for businesses as they do for customers.
However, there is a fee of 1-3% per transaction, which can eat into the bottom line of a business.
To help reduce the chances of fraud, businesses can take advantage of single-use digital credit card numbers.
Digital payment platforms
One of the most reliable and scalable ways of handling B2B payments is through digital payment platforms.
Many 3rd party services can be chosen to facilitate these payments.
Some of the top companies include PayPal, Stripe, and Payza.
Top international B2B money transfer providers
We understand that it can take a long time to figure out what payment providers are the top choice for business-to-business payments. However, these will save business money and reduce transfer time compared to most banks.
Wise is an industry-leading money transfer service regulated by trusted 3rd party organizations like the Financial Conduct Authority.
The balance transfers offered by Wise are free and take a few seconds to process in most cases.
However, the sender and recipient must have a Wise account for this transfer type to be available.
Wise also saves money on B2B transfers because it provides currency conversion rates that match the mid-market rate.
Therefore, you can reduce fees compared with banks and other transfer methods.
Wise has excellent transparency, which means you see the fees and FX rates well ahead of finalizing the transaction.
Our video review of Wise
Currencies Direct is a trusted and reliable money transfer service for businesses.
Their critical advantages for businesses include no fees, customized and flexible payment solutions, global coverage, and 65 currencies.
They offer competitive currency conversion rates, which means businesses can save money compared with most banks.
Also, multi-currency accounts are available for businesses without an extra charge.
This makes managing currencies easy, and you can take advantage of forward contracts.
Our video review of Currencies Direct
Look no further than TorFx for a trusted money transfer service that businesses can rely on.
There are no transfer fees, and the FX markup percentage is 1-3%.
This fee structure allows businesses to save significant sums of money.
Customers can have business and personal accounts, which means they can use TorFx to pay themselves a salary or withdraw dividends.
The service also provides excellent features for a business, like mass payments and spot contracts.
Our video review of TorFX
WorldRemit is a company aimed at regular customers, but they offer plenty of benefits for businesses too.
Firstly, opening an account takes just a few minutes, and you can send money almost immediately afterward.
Next, they give you access to countries worldwide, which is great for international businesses.
The flexible payment option means you can choose between credit and debit cards and bank transfers.
Finally, they have over 30,000 agent locations worldwide, which can come in handy for physical cash pickups.
Our video review of WorldRemit
PayPal is one of the most popular and widely used money transfer companies in the United States and beyond.
This means that most businesses will have an account with the service.
They are a trusted company that provides fast transfer between accounts. However, the processing times when banks are involved take multiple days.
PayPal is available in 200 countries worldwide, and they offer access to most currencies.
This ensures that businesses will not face limitations when expanding into emerging markets.
Also, their customer service department is responsive and goes the extra mile to offer strong assistance.
Key features of a B2B payment systems
Now let us turn our attention to the crucial factors worth paying attention to when selecting a B2B payments system. These are essential aspects of choosing the right platform for business payments.
Mass payment processing: mass payment types refer to transactions where the sender transfers money to more than one recipient. Depending on the scale of a company, large mass payments might be required to hundreds of entities at a time. Therefore, mass payment processing must allow for scale and large sums of money. TorFx is an example of a company that offers reliable mass payment processing services.
Creditworthiness: a payment system may provide the functionality to hold your money. However, you cannot trust a company unless you know that they do not have large debts or liabilities. Checking a company’s creditworthiness can help you determine if a payment system can be trusted with your money.
Guidance: it is difficult to figure out how to use a new platform to execute business payments. Therefore, it helps if the service has a handy customer service department to provide solid guidance. Ideally, there will be a mix of live chat, phone, and email.
Banking rules: note the rules of the banking practices on the platform. Ideally, they will match your business and the way you like to transfer money. Learn the cost, transfer time, and available banking transfer types available.
Compliance: complete background checks on a business payments platform to ensure they abide by the law and have been verified by government organizations. Regulatory bodies like the Financial Conduct Authority regularly audit money transfer services to ensure their financial practices are sound.
Superior portal: compare the platform with alternatives to see if they have the best reviews and features. Visit review websites like Google Reviews, TrustPilot, and social media to check out what customers are saying about the platform. Typically there is consensus about the top performers that you should start with.
Advanced payment configuration: this feature allows customers to set up payments in a way that helps businesses automate B2B international transfers. For example, if a business periodically wants to send money to a specific company, this feature should be provided.
Transparency: find a platform where the fees are transparent. This allows you to manage cash flow and determine how much the money transfer will hit your bottom line.
Benefits and risks of using B2B payment systems
Companies that have never used B2B payment systems are missing out. Let us explore a few top reasons why you may want to switch to one of these systems.
- Automation: large companies that need to set up recurring payments to many other businesses can benefit significantly from payment platforms. The automation tools reduce the manual labor required to process transactions.
- Reduce fees: competitive B2B payment platforms offer lower processing fees and banks. This means businesses can settle payments without paying a significant amount of money in fees.
- Analytics: many platforms provide strong functionality for finding specific transactions and grouping them for future analysis. This allows companies to figure out how much money they might be spending on each part of their business.
- Customer service: top-tier payment platforms offer a robust service experience. Options like TorFX come with a dedicated customer service representative that has a direct understanding of your account.
- Low risk: the security protocols used by B2B payment platforms are excellent. Companies can expect their transactions to process every single time without fail.
- Initial costs: moving to a new system from an existing one might be costly.
- Initial setup: if there's an existing infrustructure in place, it might be difficult to move to a new system without disrupting the workflow.
- Features: B2B payment systems provide an array of features, figuring out what fits your business might be crucial to the business.
More on international B2B payments
What is a B2B ACH payment?
Is PayPal B2B or B2C?
What is PayPal B2B?
What are B2C payments?
What are the most popular types of B2B payments?
Let's recap: what are business-to-business money transfers?
In his guide, we learned that B2B money transfer platforms offer multiple benefits, and choosing one requires considering several factors. Also, there are several competing platforms to choose from, and the top ones we recommend include TorFX, Currencies Direct, Wise, and PayPal. We recommend these options because they offer access to many countries and reliable payment processing. However, to find what works for you, start by comparing your options using the form below.
