B2B commerce is well established as a beneficial business model. As with most business matters, B2B sales are becoming more streamlined as modern technology develops. Many businesses are turning to digital platforms to improve their operations. In the wake of COVID-19, a digital approach is even more attractive. Besides the obvious, how do digital B2B payment platforms differ from traditional methods? What are the benefits and drawbacks to consider?
Traditionally, paper checks, credit cards, automated clearing houses (ACH), and wire transfers were — and often still are — used in B2B transactions. While these methods are still occasionally used by some in person-to-person (P2P) and business-to-consumer (B2C) transactions, the transition to digital platforms is accelerating, and B2B transactions are slowly adapting. PayPal is among the most popular digital payment platforms. The money transfer service was established in 2003 and is used primarily for P2P payments alongside other lesser-known services such as Skrill or Square. As digital platforms continue to increase in popularity, businesses now have a wide selection of available options.
Every service has its drawbacks, and B2B digital payments can suffer from unique challenges, including:
- Poor user adoption. While this can be avoided with a well-designed interface, customers accustomed to making payments one way will need convincing to switch to a different method — even if it is easier and more efficient.
- Not made for B2B. When programs adopted for B2B originate as B2C services, they may lack features necessary for B2B commerce, such as the ability to contact a sales representative, allow multiple user logins on the customer’s end, and sales representatives empowered to make purchases on their customers’ behalf.
- Impersonal In B2B commerce, a relationship between buyer and seller is essential, and self-service digital payment platforms create distance and make seller involvement difficult.
- Limited customization features. One size rarely fits all, and the inability to customize vital features of digital payment platforms make some aspects of the purchasing process challenging. Finding a specific payment platform that works best for your company may be time-consuming and labor intensive.
- You don’t own it. Third-party services require monthly fees, features and services are subject to unexpected changes, and your company could be left hanging should the service go out of business.
Despite the drawbacks, there are also numerous benefits to digital payments, including:
- Popularity with clients. Digital payments appeal to the newest generation of business owners, and clients will appreciate the safety of convenient, contact-free options.
- Efficiency and reliability. Digital money transfers are quicker than processing payments by hand, and they eliminate the possibility of human error.
- Improved customer service. One persistent customer service problem is the difficulty of getting in contact with a representative who can resolve a customer’s issue. With digital commerce, there is less concern over long waits to address problems with an order.
- Reach a wider audience. Digital payments provide easy access that appeals to customers, and most will already be familiar with popular payment platforms.
- Data analytics. Many services offer analytics for tracking demographic information and other valuable data.
- Limited contact. While this impersonal element can be a drawback, limited in-person contact ensures safety during the COVID-19 pandemic and allows business to continue with less risk of exposure.
Digital payment platforms are an increasingly popular option for B2B commerce — and for good reason. Potential drawbacks should be carefully considered, but most can be avoided with careful research prior to implementing digital payment options.