The Right Payment Rail Mix To End B2B Payments Friction

Nov 30, 2020

When it comes to B2B payments, having just one payment rail will not suffice in resolving every stage of friction. It has been proven through research that adopting multiple rails of payments can actually spur revenue. 

Payment rail innovation is being seen in both FinTech suppliers and corporates to alleviate friction in employee payroll, invoice payments, and card acceptance. 

Multiple Payment Rails In Action

Companies that have always used paper checks for payroll are slowly moving away from using this as well as direct deposit. By exploring new payment rails, they will be able to help employees in trouble. In order to connect more employees with cash, they are turning to PayPal, payroll cards, and a host of other electronic payment methods. There is an early wage access tool called DailyPay, whose use has surged 400% in three days. This is in response to more professional employees seeking payroll options that are more flexible. 

Siam Commercial Bank, based in Thailand, has expanded its partnership with Ripple, a blockchain technology firm, to increase its cross-border payment capacity for its business customers. Ripple will make its mobile app, once for consumers, to “corporate users” in order to link small businesses to cross-border payments in real-time. This has the potential to address global payments friction within the B2B industry. 

In a survey conducted by Weave, a business solution provider, the data demonstrated that mixing payment rails could encourage customer satisfaction. Although more than one-third of SMB (Small and Medium-sized businesses) are interested in paying by text, only 4 percent of SMBs say they offer this as an option. 

In addition, only 16% of respondents said they currently offer more than three payment methods. For those companies that offer at the minimum of four different payment options, their annual revenues came seven-times higher than SMBs that only offered less than four payment methods. 

When it comes to B2B payments, commercial cards are generally seen as more advantageous for the buyer, rather than the supplier. Card acceptance is seen as a crucial barrier to the adoption of corporate cards. Plastiq provides a solution to facilitate payments via a card. Vendors can still accept payments in their preferred method. This company plans to expand its SMB customer base and also continues to support SMB’s access to funds through card products., a cryptocurrency platform, wants to enable businesses to get paid in cryptocurrency. They have facilitated this by launching a solution that enables businesses to get paid in crypto when they issue out invoices. Through Pay, sellers can create “crypto-friendly invoices” that lets customers settle with a wide choice of cryptocurrencies, including Bitcoin. The payment is then converted to fiat currency with a fixed exchange rate for the seller. 

The Answer Is In the Mix

The strategy of mixing payment rails is growing in popularity for obvious reasons. The most important being that it addresses the ongoing B2B payment friction from many different fronts. By adopting commercial cards and the opportunity to provide more flawless global transactions, there is so much to be gained. 

Thanks to the ongoing innovations of many FinTech companies, this is going to be more of a reality for small and medium-sized businesses. 

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

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Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

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