Which Payment Methods Your B2B Marketplace Can Use
First online marketplaces aimed at business customers, or business-to-business marketplaces, used cheques and cash-on-delivery as their main payment methods. These two methods of paying for delivery of goods and services are still in use while e-commerce merchants can now take advantage of a number of faster and more convenient methods to pay for products.
As cheques are expensive to handle and cash out and pay-on-delivery does not work for some producers and vendors selling their products or services though online marketplaces, a good number of websites have adopted payment methods such as wire transfer, credit and debit card payments, ACH (Automated Clearing House) transfers, electronic funds transfer and e-wallet payments. An emerging option is to use cryptocurrency for purchase of products online but it is still an exotic payment method.
Cheques and Cash-on-Delivery
Cheque payments are a disappearing method for B2B payments after serving the business community well for decades and even centuries. They are however not really convenient : you can lose them by accident and you need to visit a bank in person to cash a cheque out.
For its part, cash-on-delivery works only for e-commerce marketplaces where buyers and sellers exchange relatively small amounts of money. You cannot expect someone to pay for industrial equipment upon delivery, for instance.
Bank Transfer and Card Payments
Wire transfers and payments through a credit or debit card are still the most popular method for B2B payments and for online purchases of goods and services as a whole. Payments via bank cards are executed instantly while a bank transfer may take between 2 and 5 days to complete. Nonetheless, bank transfers are still the most secure payment method closely followed by card payments.
Actually, any card payment is a sort of bank transfer as your card is always linked to a bank account. That said, we can say that bank transfers will retain their position as a major method for businesses to buy and sell goods and services online. ACH payments are also a sort of a bank transfer used to pay for bills or delivery of products.
Electronic Funds Transfer
These are too bank transfers but the term is coined and used mostly when international cash transfers are involved or when businesses make direct payments for delivery of goods or services. The term is used interchangeably with wire transfer to describe electronic payment for products.
Online payment processing services are taking out the market for B2B with storm in the past decade, gradually replacing traditional payment methods. This payment method enables the instant transfer of funds for various purposes and enable businesses to make international payments in seconds.
You should be aware, however, that not every e-wallet or online payment processor is suitable for an online marketplace. There are payment methods developed specifically for use by individuals and family members, others are good for sending money abroad, while only a handful of payment processors meet the specific needs and requirements of an e-commerce marketplace.
Many B2B e-wallets act also as payment gateways thus eliminating the need to connect a payment gateway to end-user payment processor and e-wallet. Some of the popular and reliable online payment processors for B2B marketplaces include services like Adyen, Alipay, Amazon Payments, Authorize.NET, Payoneer, PayPal Payments Pro, Stripe and WePay.
All of the above payment methods are feasible for any online marketplace while new technologies like blockchain open the gate for more advanced and secure payment methods. Not many e-commerce sites accept digital currencies other than Bitcoin or Ethereum now. Nonetheless, the fast developments in the field of smart contracts and cryptocurrencies backed by blockchains are making crypto e-commerce a viable option.
What you should always have in mind is that selecting the right online payment gateways/processors is the more challenging part of establishing a working and secure online marketplace. Once you have a reliable payment gateway in place, you can add or remove specific payment methods and payment providers to meet your current needs and demand by customers.