Tag Archives: B2B

How Automation and Virtual Cards Help Firms Meet Their Next-Gen B2B Payment Needs

Business-to-business or B2B payments have become essential to businesses as of late. Companies want to complete transactions between one another the same way as they manage B2C deals. They want transactions that are secure, easy, and fast to handle without having to add more data in the process than whatever is necessary.

With MasterCard reporting that the B2B payment market is close to $100 trillion in value, the need to facilitate B2B payments has never been more essential. Businesses are looking to find new ways to interact with one another, which is where automation and virtual cards can work. These can help for B2B payments by facilitating transactions in less time.

B2B payments can take a while to complete, plus they can feature extensive details that are often complex to manage. New forms of technology will make these payments easier to follow, although proper adoption of these efforts will be necessary for them to be successful.

A Need to Settle Payments Sooner

The main reason why automation and virtual cards are working in next-gen B2B payments is to ensure payments can go forward in less time. Settlement speed is critical, as faster transactions make it easier for businesses to forecast their cash stores. The use of electronic transactions through these measures is also convenient, as it is easier for people to process funds through these than if they used manual paper checks for their transactions.

Safety Is Also Critical

The rising B2B industry has also made it to where some payments might be tougher to complete than necessary. Today’s B2B payments need to be safe and secure by keeping private data from being exposed. It could also entail processes that are predictable and easy to organize without adding anything more complicated than necessary. Proper safety and protection will be critical for ensuring there are no struggles in completing any transactions.

What Automation Entails

Automation is a part of B2B payments that could make an impact soon. Automation entails using electronic processes for managing payments. A business will utilize a new infrastructure that can capture payment data and automatically forward it to the proper parties as necessary. Some of the automated functions that can work include handling payments through bank accounts and using routing numbers to send funds.

The use of application programming interfaces or APIs will be critical to the success of any automated campaign. APIs allow businesses to enter in and send data to others when completing transactions. The data the business enters will move in the proper data entry sets, allowing each payment to remain categorized and sortable. Businesses can use these API systems to ensure transactions can go forward in moments, although their success will vary surrounding how well each API setup can work as necessary.

Machine learning could also work in some situations, as it can match invoices to their necessary payments. The matching process helps people track incoming payments in moments. Machine learning helps produce a faster processing speed, plus it makes payments more efficient. It may also save operating costs in some cases, especially when the apps are stable and easy to utilize.

APIs and machine learning also ensures businesses only have to provide the necessary data for whatever transactions they wish to complete. They will keep from sharing excess data that might become lost or stolen. Businesses only need to provide the details that are critical for the deal, ensuring an improved approach to handling the payment process.

The Use of Virtual Cards

Virtual cards have become more appealing to customers recently. Virtual credit cards allow people to complete credit card transactions without using or exposing their real card numbers. A virtual card uses a separate number that hides the customer’s real data, ensuring further security. The virtual card number changes each time, as tokenization allows a real card number to work with a separate single-use number for each deal it completes.

Customers appreciate these for how they make transactions easier to follow. They can trace different transactions they complete, but their actual data will still be concealed to where other parties cannot load the data.

Businesses can also use virtual cards to manage B2B payments. Virtual cards let businesses protect their financial payment systems while ensuring they can forward funds.

The best way to explain a virtual card is that it is a card-less payment solution. It uses a credit card-like system, but it doesn’t require as much infrastructure. It is also more secure than anything else a person might utilize.

Virtual cards are also effective for helping businesses review their spending habits. Companies can review real-time payment data through virtual cards.

There are worries about whether other businesses can accept virtual cards though. They may not fully understand how these cards work or why they are beneficial. They might ask for real cards instead, which some businesses may not be as comfortable with than others.

Artificial intelligence may help make it easier for businesses to accept these virtual cards. Artificial intelligence can identify unique virtual cards and treat them the same way as they review actual cards. Businesses will still need to incorporate new AI systems in their work to ensure they can accept these cards.

Access Is Critical

As appealing as automation and virtual cards can be for B2B transactions, there are still worries about whether businesses can access these technologies. About ten percent of small or medium-sized businesses say that they have payment modernization systems up in place. They are still figuring out what they should be doing with their funds.

Further work will be necessary for helping businesses to adopt next-gen B2B payment methods. It will be easier for businesses to handle funds between one another if they use the right processes for managing their funds. The industry is growing, so there must be a plan for ensuring transactions can move forward while also remaining safe and functional.

Frequently Asked Questions

Moneris and BMO Collaborate on B2B Payments in Canada

Business-to-business payment management is critical to the success of every business. Businesses often need to pay each other for activities, shipments, contracts, or other things where they have partnerships with one another. Moneris and the Bank of Montreal have developed a new system that will make these B2B payments easier for everyone to follow.

The Moneris financial technology company provides payment processing services for clients throughout Canada. The company will be expanding its reach through its new partnership with the Bank of Montreal or BMO.

Moneris will offer support for business-to-business payments with Moneris B2B Pay, a new payment processing solution supported by BMO. The program will handle automated processing efforts to support faster payments between businesses, helping them stay afloat during this uncertain time in history.

B2B Pay comes as clients are becoming increasingly reliant on digital payments. The pandemic has forced people to focus on digital payment processes instead of traditional paper-based ones. While the advancement to digital-only payment efforts had been considered inevitable, the evolution has sped up in the past year due to the pandemic.

Canadian businesses can use the B2B Pay system to handle payments in moments. It provides a more secure and rapid approach to payment management that all parties can trust. The system also comes from two of the country’s most trustworthy financial services organizations, so it will be something that will attract many potential clients.

What Makes Moneris B2B Pay Work?

Moneris B2B Pay will help purchasers and vendors handle virtual business card payments. B2B Pay can work with cards like BMO Approve2Pay. A purchaser can start handling payments through a virtual card. Such cards do not require a physical presence. The proper information for each card account can go online through B2B Pay. The system can read all data and automate transfers, ensuring transactions can remain consistent and thorough.

A vendor can also accept funds without outside issues. The funds can go towards the proper accounts when collected.

The system provides a simplified approach to handling payments that all people can utilize. It becomes easier for people to keep track of payments between businesses with the new system.

What Makes It Special?

The B2B Pay system provides an automated approach to payments. The processing effort works fast, and it doesn’t require manual inputs or other unnecessary efforts. The system reduces the cost of trying to handle payments, plus it ensures payments can go forward a little faster.

The system also automatically produces remittance reports. These are necessary for reconciliation efforts that usually happen after each month.

The setup also has a secure design that encourages trust. The system uses fraud protection and identity confirmation data to ensure all transactions stay safe and accurate. The design also boosts relationships between businesses, as they will use systems they can agree to use.

Moneris and BMO are also promoting the work as a stress-free solution. The system provides a scalable approach that can fit whatever needs businesses hold when getting their operations moving right. People can contact the two entities to see how the B2B Pay setup works and what they can benefit from the most.

What BMO Customers Can Utilize

BMO commercial customers can use the Moneris B2B Pay system alongside the BMO Approve2Pay system if they wish. Customers can use the Supplier Enablement Services provided by Moneris. The system gets the vendors a client utilizes to take virtual card payments. The system can work even when the firms that use it aren’t currently supporting such payments. The system adds to the flexibility a business has in managing payments.

Necessary For All Businesses

The B2B Pay system will be critical for all businesses in Canada to explore. Back-office operations have to stay online without worrying about how payments work. Online B2B payments make it easier for virtual cards to operate.

The system also works with cloud-based systems and machine learning efforts to make it easier for B2B payments to move forward. Activities can be forwarded well and can stay active, plus predictive reviews make it easier for B2B payments to work right. The cloud-based approach also ensures the content can be made available online as necessary.

While businesses can afford to allow their employees to telecommute, the process of handling payments will remain rigid. Payments must go through a consistent network to make it easier for the program to run well. The B2B Pay system will make it easier for the program to work.

Backed By Two Prominent Entities

The new B2B payment support system comes from two of Canada’s top financial service groups. Moneris is a popular Toronto-based business that handles online and in-store payment transactions throughout Canada. The company supports businesses in all industries, plus it offers twenty-four-hour customer support for whatever needs businesses may hold.

Moneris takes pride in how the company supports the Canadian economy. Moneris manages billions of transactions each year, plus the company supports hundreds of thousands of merchant locations throughout Canada.

Bank of Montreal also has one of the most massive infrastructures in Canada. BMO has been around for more than two hundred years. The company has assets of close to $1 trillion as of early 2021. BMO serves more than twelve million customers and provides commercial banking and wealth management solutions for businesses throughout Canada.

What Traditional Cards Work?

The B2B Pay system can also work with many traditional cards that the two businesses hold. These cards include credit and debit cards from all the major banks throughout Canada. The new system will focus on supporting whatever payment cards businesses wish to utilize, even if they entail virtual ones.

The partnership between Moneris and BMO will make it easier for businesses to manage payments with one another. People can handle their payments well and ensure their funds move forward without risking possible losses. People will appreciate how the system works and how it will manage all the payment needs they may hold for future purposes and projects.

B2B Payments Firm AvidXchange IPO Could Value the Company as High as $7 Billion

AvidXchange has become a highly valuable business-to-business payment service provider that helps small and mid-sized businesses manage their payment activities. The Charlotte-based company has attained support from many entities, including MasterCard, PayPal, and various others. The company’s work helps automate various financial activities, from creating invoices to sending payments. It also provides accounting help for businesses that need extra help in maintaining their financial records.

AvidXchange is now looking to establish an initial public offering or IPO. Reuters reports that the IPO could give the company a valuation of up to $7 billion.

AvidXchange is working with many prominent entities to prepare its IPO. It is working with Goldman Sachs, Bank of America, Barclays, and JPMorgan Chase to get its IPO ready.

The company’s value has been rising over the past year, as people are quickly turning to digital payments. The ongoing pandemic has forced many businesses that use paper-based processes to go to digital-based approaches.

The company is expected to have a high value for its IPO. AvidXchange has become a necessity for many businesses, and its upcoming value is expected to show this point. When the IPO is made available remains unclear, but it will be something that remains in demand for investors.

About AvidXchange

AvidXchange was formed in Charlotte in 2000. The company manages automated invoicing activities for business clients. The AvidXchange platform gathers accounting information and provides thorough clarity for businesses looking to manage their payrolls, invoices, and other charges.

AvidXchange has a network of more than half a million suppliers. The company processes its transactions over this network to support thousands of business clients looking for help with their money needs.

AvidXchange has a thorough infrastructure with more than 1,500 employees working in seven office locations, including ones in the Houston and Salt Lake City areas. Most of the company’s activities occur in the United States, but its global reach is expected to increase as more people become aware of what AvidXchange offers.

The company’s revenues have been rising in the last few years. The company saw an estimated revenue of about $145 million in 2017. Information on how much revenue the company has received since then remains unclear, but the business is still raising immense amounts of money.

What Is the Value Range?

While the IPO for AvidXchange is expected to be about $7 billion, the value is expected to vary. The IPO could be as small as $5 billion, or it could be up to $10 billion. The demand that investors hold will influence the potential IPO value.

Whatever the case, the IPO value will likely be significantly higher than what AvidXchange was valued at a year earlier. The latest fundraising effort for AvidXchange in April 2020 produced a value of about $2 billion. The company also saw another fundraising project in January 2020, but that was worth $260 million.

How Does It Compare?

To understand the potential of AvidXchange’s value, it helps to compare the company with other industry contenders. Bill.com has seen its value rise by more than 300 percent in the past year. Coupa Software has also seen its value increase by nearly 90 percent in that time.

The Swedish company Klarna is also competing with AvidXchange and continuing to grow. Klarna is in a funding campaign with a valuation nearly triple its original value from when it last contacted investors for help in September.

These numbers suggest that AvidXchange will likely become more popular and viable for business sales. The IPO will already be worth billions of dollars, but whether the IPO will reach the eleven-digit value range remains unclear.

Still Important

One valuable part of AvidXchange comes from how the service still remains important for everyone to use. AvidXchange’s website says that the company handles more than twelve million payments each year. These payments total around $140 billion.

AvidXchange CFO Joel Wilhite continues to lead the company. He has argued that companies must know how they can manage business continuity efforts during uncertain situations like the ongoing pandemic. He also says that technology is making it easier for businesses to pivot and stay operational. Understanding the many scenarios and situations that might develop can be critical to success. The AvidXchange system makes it easier for businesses to review new situations and to adapt to them as necessary.

The potential for businesses to go back to traditional paper-based platforms for invoices and other pieces of data is questionable. Businesses may demand digital solutions that are easier to analyze and plan as necessary. AvidXchange will be there to assist companies in handling whatever tasks people wish to manage for their invoices.

Expect AvidXchange to remain an exciting solution for future business activities. The demand for services will likely cause AvidXchange to be more valuable for investors to explore.

What Will Happen?

All parties talking about the AvidXchange IPO plans have been speaking on anonymity. The company itself is not speaking about the point. The banks working on producing the IPO are not talking about anything either.

The specific timing for when the IPO will be available also remains unclear. IPOs can take weeks or even months to complete. IPOs are factored over the current assets a business has, its potential for growth, and the possible demand people might have for the investment. The analysis process will require extensive work to ensure all investments are managed right and that there’s a plan for making things work well enough.

But the potential for the AvidXchange IPO to be highly valuable is significant. AvidXchange has a valuable asset for work that could make it where an IPO will be easy to access and utilize. The IPO will be worth billions of dollars more than what the company was estimated last year. How high the IPO will be worth remains unclear, but it will be an exciting point to explore as the industry moves forward and becomes in high demand.

Frequently Asked Questions

Visa Looks to Streamline B2B Payments

The best way to win your customers’ hearts is to provide them with a more flexible payment system and allowing them to choose how they conduct transactions. We live in a world where faster payment modes are given more preference. In this regard, Visa’s recent efforts to transform the B2B payments space need special attention.

Visa B2B Connect

Visa B2B Connect is an innovative non-card based payment network designed to streamline all cross-border, business-to-business payments. The technology enables the participating banks or other financial institutions together with their business customers to make secure, predictable, and streamlined global business payments.

Visa B2B Connect comes with a multilateral payment system that allows one to make bank-to-bank cross-border transactions between different businesses. In this network, one can make payments between any banks that are connected to one’s specific platform, thus having a more improved, streamlined, and consistent payment experience.

Difference Between Bilateral Network and Visa B2B Connect Multilateral Network

Legacy Bilateral Network

Payments via bilateral networks occur only between two parties or financial institutions at a time. Hence, they require multiple handshakes between disparate systems and banks present across different locations before finally reaching the beneficiary. This process, therefore, can create greater delays in payments while increasing the costs unpredictably and producing inconsistencies in the payment data.

For example, the transaction flow of a bilateral network looks something like this:

The Originator Business starts the transaction process via its Originating Bank.
The bank then sends the transaction information to a Domestic Correspondent Bank.
Next, the Domestic Correspondent Bank sends passes over those payment institutions and information to an Intermediary Bank and then to a Foreign Correspondent Bank.
After this, the amount gets deposited to the Beneficiary Bank, which belongs to the Beneficiary Business.

Therefore, it is quite a long-winding process.

Visa B2B Connect Multilateral Network

The Visa B2B Connect multilateral network, on the other hand, enables a system of one-to-many global payments that are transacted between any participating bank. It helps to streamline the payments with higher predictability, efficiency, and transparency.

In other words, with Visa B2B Connect multilateral network, there would be no multiple intermediary banks involved in the transaction made between the Originator Bank and the Participating Bank that is connected to the network. The funds will straightaway be transferred from Bank A of Company A to Bank B of Company B by passing via the Visa B2B Connect platform.

Benefits of Visa B2B Connect

Visa B2B Connect is designed to address all the limitations present in the existing bilateral wire transfer processes, thus enhancing transacting experiences. Some of the key benefits of Visa B2B Connect include:

● Real-time Visibility and Predictability

You can gain improved real-time visibility into your transaction status as Visa B2B Connect reduces multiple handoffs or handshakes in the payment chain. It further helps to enhance the predictability of each of your transactions and have better insights into when and how your funds would land on the beneficiary’s bank account.

● Payment Transparency and Finality

With Visa B2B Connect’s payment network, one can make seamless bank-to-bank transactions using the streamlined and robust data for easier reconciliation and enhanced transaction accuracy. The system offers clear and transparent transaction payment schedules and costs that reduce all payment uncertainties.

● Digital Identity

All your sensitive business and payment data will be secure and protected as Visa B2B Connect uses unique digital identities to tokenize your data. This further reduced any cybersecurity attacks or fraudulent activities.

● Consistency of Transaction Data

Visa B2B Connect’s consistent data makes way for a stable and seamless transaction experience for all businesses and financial institutions. Besides, the network allows a much more simplified and smooth reconciliation process.

● Multilateral Network

Using Visa B2B Connect’s multilateral network, you can transform and streamline the payment path as it offers one-to-many global access. Besides, it boosts the peer-to-peer exchange of essential values and interconnects large-value payments in a multilateral ecosystem.

● Interoperability

Visa B2B Connect has the ability to work alongside and together with legacy systems, which facilitates the bank’s transition to advanced future payments. Interoperability used in payment systems helps to reduce costs associated while establishing an acceptance network. Additionally, it also improved your value proposition by expanding the type and number of acceptance points for your customers/clients.

● Reduced Complexity

Using Visa B2B Connect’s centralized network, you can reduce the number of connections and relationships a particular bank needs to manage, which in turn, reduces complexities in the entire payment environment.

● Advanced Security and Fraud Protection

Visa B2B Connect’s network is strengthened by Visa’s security and advanced distributed ledger technology. In fact, Visa B2B Connect is built with a closed and permissioned network wherein all the members are trustworthy and known. Further, all your account data will be tokenized using a unique digital identity, which helps to prevent fraudulent attempts and opportunities.

● Flexible and Compatible

Visa B2B Connect provides a wide array of implementation and application options, which caters to the unique requirements of the business. You can also shift to a modern and more improved payments experience, compatible with all your existing business solutions.

● Global Connectivity and Easy Growth

This cross-border B2B payments network by Visa is developed using the brand’s unparalleled capabilities and core assets. Using Visa B2B Connect, you can enjoy a seamless same-day or next-day access to multiple currencies across the world via a single integration. The best part is the system is highly scalable, so that you can grow your brand and revenue.

Final Words

Visa, therefore, has tremendous abilities to offer a global and more flexible payment solution to all cross-border business transactions. The card brand has proven capabilities to achieve a unique and unsurpassed global network scale. Moreover, VisaNet has happily connected more than 15,500 banks and other financial institutions across the globe.

Visa, being a financial technology innovator, has successfully built thousands of strong relationships with several banks spread across multiple countries, creating a powerful network for the new Visa B2B Connect technology. Coming to the question of trust, Visa is a brand proudly carrying a decade-long track record of top-notch security, safety, and speed.

B2B Payments: Pandemic Pushes Many Businesses to Automate Accounts Receivables

Chasing money from clients is probably one of the least desirable parts of owning a business. It takes away from many other tasks you could be doing – tasks that may grow your business rather than give you tedious or repetitive tasks to manage, but getting B2B payments is a part of doing business.

The pandemic has caused many companies to cut down on staff, and one of the first areas is always accounts receivable. This makes the average days of sales outstanding continually grow, and further hurts your business. Automating accounts receivable is one of the most important moves you can make.

Why is Automation Necessary

All businesses, no matter the size need automation today. It frees up the skeleton staff, enabling them to work on other tasks that keep the business running.

It’s like a double-edged sword. If you don’t automate AR, you could sit on unpaid bills for many months. Without the funds, you may not be able to continue growing or even operating because you’re low on capital. Without a full staff, though, it may seem impossible. It may have even seemed impossible when you had a full staff.

Automation takes the work out of it. When you automatically send notices, it’s not you or a staff member doing physical labor – no one has to take time out of his/her day to work on the A/R, make phone calls, leave voicemails, and send emails. Everything is done for you.

What Does Automation Look Like?

Accounts receivable automation for B2B payments will look different for every company. In general, though, expect:

Send notices before an invoice is due. Pick a duration, such as 2 weeks before it’s due, and send an automated reminder. The hope is that the reminder before the bill is due is enough for the company to pay the bill on time.
Send automated reminders at specific frequencies once a bill is past due. Whether it’s a few days, once a week, or every other week. Set up automatic reminders until they pay the bill.
Combine an automated process with manual processes, but not inside your company. Have the salespeople jump on board. Let your salespeople know when the bill is late and have them follow up on the notices you send. Sometimes that personal touch is all a company needs to get the bill paid.

Don’t Let Accounts Receivable Fall Behind

Accounts receivable is what makes your company stay in business. Without it, you don’t have money coming in. Because of the pandemic, many companies are purposefully behind or forced to be behind because their own sales are down.

Stay on top of your A/R by automating the processes to avoid losing business. Automating the process takes the labor off your staff and still allows you to be profitable collecting B2B payments. In today’s pandemic, every business owner needs to think outside the box, and accounts receivable is a great place to start. Get your A/R under control and the rest will fall into place.

MasterCard Launches Global B2B Service

More than a year after announcing the launch of MasterCard Track, a B2B digital platform for improving global trade among small businesses, MasterCard has unveiled new plans to modernize business-to-business transactions even further. The new MasterCard Track Business Payment Service expands the focus of the digital platform for faster payments and data collection.

What Is MasterCard Track?

In 2018, MasterCard launched Track, a business-to-business platform to simplify and speed up global trade. The platform, powered by Microsoft Azure, connected buyers and suppliers with each other, lenders, and other networks.

Business-to-business transactions largely remain outdated despite rapid advancements in the rest of the business world. Manual invoicing and paper checks remain common with administrative costs nearing $500 billion. According to MasterCard, nearly 50% of all business-to-business transactions, or nearly $58 trillion, are still done on paper.

MasterCard Track partnered with nine procure-to-pay providers and business-to-business networks to help organizations maintain, exchange, and retrieve data about themselves and their partners. Track helps facilitate communication by connecting networks in a single platform.

What Is the Track Business Payment Service?

The Track Business Payment Service represents a new branch of the MasterCard Track platform that focuses on payments rather than networking and communication. The MasterCard Track Business Payment Service is the first commercial and global open-loop service built to automate business-to-business payments. The service modernizes payment processing by helping buyers and suppliers overcome outdated systems and improve the way businesses pay and get paid.

The Track Business Payment Service works as a single connection to combine multiple modern payment solutions with a focus on faster payments and real-time data collection.

All Payment Types in One Service

The Track Business Payment Service works as a single connection to combine multiple modern payment solutions with a focus on faster payments and real-time data collection.

Availability Begins in 2020

The MasterCard Track Business Payment Service is set to roll out across the world, beginning in the U.S. market in the first half of 2020. The service will be available to merchants and supplier partners who can incorporate it within existing products. Currently, the service is being piloted by partners including B2B payments optimizer Boost, payment solutions providers TSYS and CSI, Accounts Payable automation provider AvidXchange, and Accounts Receivable software providers HighRadius, YayPay, and VersaPay.

Frequently Asked Questions

What is Mastercard’s new global B2B service?

Mastercard’s new global B2B service is a suite of products and services that allows businesses to send and receive payments more efficiently and securely. Mastercard Track can be used by businesses of all sizes, in all industries, and all countries.

Who can use Mastercard’s new global B2B service?

Mastercard Track can be used by businesses of all sizes, in all industries, and all countries.

How does Mastercard’s new global B2B service work?

Mastercard Track works by using a network of banks and financial institutions to facilitate payments between businesses. This network allows businesses to send and receive payments quickly and securely, regardless of their location.

What are the benefits of using Mastercard’s new global B2B service?

There are many benefits to using Mastercard Track, including:u003cbru003e u003cbru003e● Faster payments: Mastercard Track can help businesses send and receive payments up to 24 hours faster than traditional methods.u003cbru003e● Increased security: Mastercard Track uses the latest security technology to protect payments from fraud and theft.u003cbru003e● Reduced costs: Mastercard Track can help businesses reduce the costs associated with sending and receiving payments.u003cbru003e● Improved cash flow: Mastercard Track can help businesses improve their cash flow by making it easier to track and manage payments.

Who can use Mastercard Track Business Payment Service?

Mastercard Track Business Payment Service can be used by businesses of all sizes, in all industries, and all countries.u003cbru003e u003cbru003eHere are some additional details about Mastercard Track Business Payment Service:u003cbru003e u003cbru003e● Mastercard Track Business Payment Service allows businesses to send and receive payments using virtual cards. Virtual cards are one-time-use cards that are created for each payment. This helps to reduce fraud and improve security.u003cbru003e● Mastercard Track Business Payment Service is available through a network of banks and financial institutions.u003cbru003e● To get started with Mastercard Track Business Payment Service, you will need to contact your bank or financial institution.

B2B Payment Processing Solutions and Interchange Rates

B2B, or business to business, describes a transaction in which the customer is another business rather than of an individual. Whether it’s goods, services, or both, B2B payments include transactions such as purchasing supplies to do business, buying lunch for employees, or paying for travel expenses. Though the payment methods for B2B transactions are often the same as for B2C (business to consumer), credit card and checks – there are differences that need to be taken into consideration. Often times businesses use “business credit cards” which have a high interchange fee compared to consumer credit cards. In this article, you will learn about “Level 1, 2, and 3 data” – a way to lower interchange fees substantially for B2B transactions.

Transition to B2B Credit Card Purchases

Businesses are increasingly moving away from invoices and checks to pay for business to business goods and services and moving toward using a business credit card to separate business expenses from personal expenses.

When setting up business to business credit card purchases, merchants can qualify for lower B2B interchange rates when processing business credit cards. By leveraging lower interchange rates for B2B credit card processing, businesses can save potentially hundreds if not thousands of dollars.

The Cost of Doing Business – Without Data

Without taking advantage of lower interchange rates, B2B credit card processing is expensive to process. The worst rate is 3.26% + $0.10 (the MasterCard rate with no AVS data). The lower rates require a business to jump through some hoops, also known as levels, in order to qualify for these lower rates. These hoops are data. The more data a business provides via a transaction, the smaller the interchange fee for that transaction.

Level 1, 2, and 3 Data – The Higher the Level, the Lower the Fees

Level 1 Data

The basic level, Level 1, is a transaction providing the least amount of data to the credit card brands. All transactions are required to reach Level 1 whether they are B2B or B2C. Merchants must provide the merchant name, purchase amount, date, and billing zip code. This level offers only a small reduction in interchange rates.

Level 2 Data

In order to reach Level 2 interchange rates, a business must provide Level 1 data, as well as other data including sales tax amount, tax indicator, and other details of the transaction. While Visa and Mastercard have different requirements for this level, Discover doesn’t offer lower rates for Level 2 or Level 3. And American Express supports Level 1 and Level 2 while it does not support Level 3.

Level 3 Data

Level 3 requires all of the data from Levels 1 and 2 plus other data such as item commodity code, SKU description, product code, and even more data points involving the transaction. Not only do the credit card brands vary in their interchange rates depending on the Level, but they also can change these rates. Thus, a merchant must be vigilant in checking the requirements.

Lower Interchange Fees for Businesses

Merchant credit card processing services can help businesses get the lowest rates possible by properly classifying the business’s MCC code, which can reduce interchange rates, by helping a business properly process large sales, over $6,500, which also can reduce interchange rates, and by providing a business software or terminals specifically for B2B sales equipped with the Level 2 and Level 3 information, which reduces interchange rates. While B2C transactions might focus on the markup, merchants want to look at the total cost for B2B transactions.