In a B2B payments landscape, 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 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.
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 secure transmission of online payment data to the payment processor. If a payment is declined, it is the payment gateway’s responsibility to inform the merchant and the customer.
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.
Payment processors come 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:
Flat fees are a monthly expense for using the payment processor.
The transaction fees vary depending on the transaction type. This transaction fee has three components: mark-up fee, assessment fee, and an 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.
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 simpler 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 a higher security and lower interchange rates.
HighRadius EIPP Cloud helps organizations to leverage Level III data to subsequently reduce interchange fees. EIPP Cloud integrates your ERP with the processor and the bank. You can achieve up to 120 basis points reduction in interchange fees by processing Level III data.
PCI-DSS compliance ensures that merchants are storing their customer’s card information in a secure environment.
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, worldpay wpg, BrainTree, Barclays, Paypal CheckOut, Tsys, Paymetric.
Level III data helps businesses save their payment processing costs by lowering the interchange rates. 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.
HighRadius Electronic Invoice Presentment and Payment (EIPP) Software provides tools that automate and speed up invoice communication and facilitate a faster collection of payments, enabling a closer and more convenient relationship with customers. It automates the invoice transmission and payment collection process providing a configurable solution that supports multiple invoice formats and different modes of transmission (fax, email, portal, etc.) depending on the targeted customer, its integration with ERP systems and a rich search capability enables efficient storage and retrieval of past invoices, backup attachments to minimize disputes and short pays. Apart from that it also has some key features that you would not want to miss out: level-III interchange and surcharge; self-service customer portal; invoicing across email, customer portals, post, and fax; advanced deduction management; and lightning e-payments. The result is faster invoicing and payment collection, better customer service, and improved profitability and cash flow.