08/11/2022 | News release | Distributed by Public on 08/11/2022 04:41
In part one of this series, we gave an overview of B2B payments in general. In this post, we'll take a more in-depth look at online payments specifically, and what to consider when it comes to implementing or expanding your digital payment capabilities.
Online payment processing is any form of payment that uses the internet to facilitate an exchange of money. Online payment platforms facilitate ecommerce, in-store, and order fulfillment transactions for all kinds of sellers, including B2C, B2B, and C2C.
Online payment processing has been around for decades, but in recent years, we've seen new innovations and platforms to make paying for goods and services easier, faster, and cheaper.
These days, nearly all payment methods include one or more online components. The primary online payment processing options include:
Most businesses will use multiple forms of online payment processing, but few will offer every option. There are pros and cons to each, and they vary based on the needs of your business and your customers.
Like any business decision, implementing an online payment system has to make sense for your bottom line. However, customers expect transactions to be immediate and easy; relying solely on offline payment methods is neither. Here are some other things to consider, if you're on the fence about online payments.
As with most things related to money and business, you'll need to ensure your online payment system is trustworthy and secure.
Security is particularly important if you're building your own online payment system. The last thing you want is the financial liability, lost trust, or bad press that comes with compromising the payment details of your customer base.
Whether you build your own system or go with a third-party payment platform, make sure your system has advanced security features, which may include:
Online payments aren't free. Most third-party providers have upfront costs and ongoing fees, based on the number or value of transactions. Even a custom-built system will incur transaction fees from banks, clearing houses, credit cards companies, or processors.
Transaction fees consist of:
Interchange fees, a portion of each sale that goes to the credit card issuer (usually a financial institution)
Assessment fees, collected by the credit card association, like Visa or Mastercard
Processor fee, also called an acquirer fee, paid to the transaction processor, e.g. PayPal, Square, BitPay
Merchant fee, which goes to your bank
Pricing structures vary, but are usually based on a percentage of the sale plus a charge per transaction. It may be possible to pass some or all of the cost on to customers, but be aware that doing so can impact customer satisfaction. Surcharge taxability varies by state, and in some states, credit card surcharges are illegal.
Additional fees may be charged based on platform usage and may include:
If you're considering a third-party payment platform, choose a well-vetted, highly reputable company. Here are a few of the more popular services:
Online payments can make it easier for customers to buy from you. However, you'll need to assess the right kind of payment options for your business, factor in the cost of setting up platforms and processing payments, and make sure you're properly safeguarding your customers' payment information.
This is the second in a three-part series on B2B payments.
Read the first installment, B2B payments part 1: Overview of B2B payments solutions.
Check back in with the Avalara Tax Desk for B2B payments part 3: Your guide to ecommerce payment processing.