- B2B Payment processors are essential in transmitting customer credit or debit card data between banks.
- B2B Payment gateways work alongside payment processors and are the online counterparts of POS terminals.
- Payment processors ensure secure payment transactions, which is critical for businesses that handle large transactions.
What is a Payment Processor?
Payment processors transmit your customer’s credit or debit card data between their bank and your bank.
In simpler words, this means that a payment processor acts as a bridge between the merchant (business), the customer, and their respective banks.
A few examples of b2b payment processors are CyberSource, Moneris, Paypal, and ChasePaymentTech.
To complete any transaction, a payment processor communicates with the following parties:
- Payment gateway
- Customer’s bank or issuer
- Merchant’s bank or acquirer
Understanding the Difference Between a Payment Gateway and a Payment Processor
Payment gateways and payment processors – these terms are often used interchangeably. This is because payment processors and payment gateways work closely together to complete a transaction. They are separate entities, however.
A payment gateway is a technology or software that reads the payment card information and sends it to the seller’s (merchant’s) bank for processing via the payment processor.
The payment gateway is the customer-facing interface. It lets the customer know immediately if the transaction is approved or rejected.
The payment processor is a company that helps manage card transaction processes. They function as mediators between customers, merchants, and their respective banks.
The payment processor does not directly interact with the customer unless there is a dispute on the transaction.
In other words, B2B payment gateways are the online counterparts of a point-of-sale (POS) terminal for your business, which means they accept online payments. Payment gateways ensure the secure transmission of online payment data to the payment processor. If a payment is declined, the payment gateway informs the merchant and the customer.
Role of B2B Payment Processors in Ensuring Secure Payments
According to a survey by AFP, card payments can lead to 34% of payment fraud. Payment processors are responsible for ensuring a secure payment transaction in the B2B space. The payment processing organization verifies the customer’s card data and if a customer encounters a fraudulent transaction, payment processors handle the situation.
What is payment processing software?
B2B payment processing software is a tool that helps businesses manage their payments. It automates the payment process and streamlines the entire process from start to finish. With B2B payment processing software, businesses can process payments quickly and accurately, without the need for manual intervention.
Why is B2B Payment Processing Software Important?
Firstly, it helps businesses save time and money. By automating the payment process, businesses can reduce the amount of time and resources they spend on managing payments. This allows them to focus on other important areas of their business.
Secondly, B2B payment processing software helps reduce errors. Manual payment processing can be prone to errors, which can be costly for businesses. With B2B payment processing software, payments are processed automatically, which reduces the risk of errors.
Lastly, B2B payment processing software is important because it can help improve cash flow. By automating the payment process, businesses can receive payments faster, which improves their cash flow. This can be particularly important for small businesses, which may have limited cash flow.
How to Adopt B2B Payment Processing Software in 2023
Now that we understand the importance of B2B payment processing software, let’s take a closer look at how to choose it in 2023.
Step 1: Determine Your Business Needs
The first step in adopting B2B payment processing software is to determine your business needs. Ask questions like – What are the pain points in your current payment process? What features do you need in payment processing software? Do you need a cloud-based solution or an on-premises solution?
Answering these questions will help you determine the type of payment processing software you need. It’s important to take the time to understand your business needs before investing in any software.
Step 2: Research Payment Processing Software Providers
Once you’ve determined your business needs, it’s time to research payment processing software providers. There are many different providers to choose from, so it’s important to take the time to find the one that’s right for your business.
Start by looking at online reviews and ratings for different providers, for example checkout G2, Capterra, Gartner, TrustRadius and more. This will give you an idea of your peers’ experience from these software. You can also ask for recommendations from other business owners in your industry.
It’s important to consider factors such as pricing, customer support, and the features offered by each provider. Make a list of potential providers and compare them based on these factors.
Step 3: Schedule Demos and Free Trials
Once you’ve narrowed down your list of potential providers, it’s time to schedule demos and free trials. Most providers offer demos or free trials of their software, which allows you to test the software before making a purchase.
During the demo or free trial, pay close attention to the user interface and ease of use. The software should be intuitive and easy to navigate. It’s also important to test the features that are most important to your business.
Step 4: Evaluate the Security of the Software
Security is a top concern when it comes to payment processing software. It’s important to evaluate the security measures in place to protect your business and your customers.
Look for providers that offer encryption, multi-factor authentication, and fraud prevention tools. It’s also important to ensure that the software is compliant with industry standards and regulations.
Step 5: Determine Integration Requirements
It’s important to ensure that the payment processing software you choose integrates with your existing systems. This includes your accounting software, customer relationship management (CRM) software, and any other systems you use to manage your business.
Check with the provider to see if they offer integrations with the systems you use. If not, you may need to invest in additional software to ensure that everything works together seamlessly.
Step 6: Train Your Staff
Once you’ve selected a payment processing software provider, it’s important to train your staff on how to use the software. This will ensure that everyone is on the same page and that the software is being used to its full potential.
Most providers offer training resources and support to help you get started. Take advantage of these resources to ensure a smooth transition to the new software.
Step 7: Monitor Performance
After you’ve implemented the payment processing software, it’s important to monitor its performance. Keep an eye on key metrics such as processing time, error rates, and customer satisfaction.
If you notice any issues or areas for improvement, work with the provider to address them. This will ensure that you’re getting the most out of the software and that it’s helping you achieve your business goals.
Introduction to Payment Processing Costs
Once you have decided to choose a payment processor, one thing to keep in mind is that it comes with a specific cost as they interact with multiple entities to complete a transaction. B2B organizations consider this expense as the ‘cost of doing business’ because it is necessary to leverage a payment processor to offer their customers payment flexibility.
Let us break down the payment processing costs to understand individual cost elements. According to an article by American Express, payment processing costs can be divided into the following types:
1. Flat Fees
Flat fees are a monthly expense for using the payment processor.
2. Transaction Fees
The transaction fees vary depending on the transaction type. This transaction fee has three components:
- Markup fee
- assessment fee
- interchange fee
Sometimes, there is a third cost element associated with payment processing which is known as incidental cost. Usually, the payment processing costs are high as all the cost elements vary on a case-by-case basis.
How to Reduce Payment Processing Costs?
Among the various cost components of payment processing, interchange rates can be reduced if the transaction is processed at a higher security level such as Level III.
Below are the various levels of data in ascending order of their security:
In simple words, Level III data provides maximum transaction-related information as a result of which, the issuer is assured about the authenticity of the transaction. So, Level III data translates to higher security and lower interchange rates.
HighRadius’ EIPP (Electronic Invoicing Payment and Presentment) Cloud helps organizations to leverage Level III data to subsequently reduce interchange fees. EIPP Cloud integrates your ERP with the processor and the bank. It seamlessly integrates with major global and local payment processors such as Chase Paymentech, FirstData, Barclays, and CyberSource. You can achieve up to 120 basis points reduction in interchange fees by processing Level III data.
To experience the solution live in action, feel free to schedule a demo with our experts.
Frequently Asked Questions
1. What Do You Mean by PCI DSS Compliance?
PCI-DSS compliance ensures that merchants are storing their customer’s card information in a secure environment.
2. What are Some of the Popular Payment Processors? Can HighRadius integrate with them?
HighRadius EIPP Cloud integrates with the leading payment processors such as FirstData – Payeezy, FirstData RC, FirstData CAD, Cybersource, ChasePayment, MonerisCAD, Moneris, MonerisPOS, PayTrace, Element, CardConnect, Elavon, AuthorizeNet, Ebiz charge, Paypal, PPRO, WorldPay, Braintree, Barclays, Paypal CheckOut, Tsys, Paymetric.
3. What is Level III Data?
Level III data refers to the maximum amount of information related to the transaction. It includes regular card authentication data, itemized sales tax amount, unique customer code, order line item, transaction details, and information for address verification. Level III data helps businesses save their payment processing costs by lowering interchange rates.