Have you ever stumbled upon a payment solution and thought, “now this will help me sell to my customers!”, only to find out they do transactions between businesses?
It’s tough when you think you’ve stumbled upon that perfect selling solution, only to find out they work with the wrong audience.
What do B2B and B2C mean?
B2B stand for business-to-business and B2C is business-to-consumer.
B2B differs from B2C in purchase complexity and cost. The best way to tell B2B and B2C apart is in the purchasing process.
Breaking down B2C
For B2C, a consumer buys a product or service for personal use. Consumers pay the same price as other consumers for a product or service. There isn’t much room for negotiation when you’re buying a shirt.
A B2C business really only needs a direct distribution channel (think retail) to make their products accessible to consumers. Distribution is widespread, and consumers engage in the purchase by themselves.
Breaking down B2B
The purchase decision for B2B however, may include input from multiple departments and stakeholders. The more complicated (and expensive) the purchase, the higher the level of authorization needed for the transaction to be approved.
B2B buyers also need more nurturing to come to a decision. B2B sales reps have a 56% better chance of making a deal when they engage with a buyer before the buyer contacts a seller. By discovering the client’s pain point early on, a sales rep can provide a suitable solution to fit the issue.
The price in B2B transactions may also vary between customers. There is room for negotiation. For example, if you’re placing a large paper order at a company, chances are the larger the order, the better the rate.
Why B2B is bigger than B2C
With an increase in self-service, customers are already more than halfway through the purchase process before reaching out to a sales rep. B2B e-commerce has an advantage over in-store sales staff with touch points like email and live chat, as well as CRM software to create a whole profile from customer data.
With a reliance on self-service in the e-commerce space, businesses need to cater to how their customers want to pay.
B2C payments are generally a one-time payment for a product and a smaller amount. B2C e-commerce is relatively simple: products are displayed on a website, consumer details are taken, and then payment is made on a secure checkout form with the consumers preferred payment type, such as a digital wallet.
When it comes to B2B payments in North America, things get a little more complicated. Products and services may still be displayed on a website, but electronic orders must be able to sync up with other administrative systems like invoicing, customer records, and accounting.
Given the volume and simplicity of B2C payments, you might expect B2C sales to be higher than B2B. However, this is definitely not the case. B2B sales outweigh B2C sales by $5.4 trillion. That number starts to make sense given that the average B2B sale is $491, vs. $147 for the average B2C sale.
But just because things get a bit bigger and complicated in B2B doesn’t mean the payment process needs to be painful.
Primary types of payments
There are a few main ways businesses like to pay.
Credit Cards: Credit cards continue to dominate the online world. They are a fast, secure way to pay by credit. Convenient, as almost everyone has a credit card, this type of payment is great for one-off payments, or saving the card information for recurring payments.
B2C example) Consumers enter a credit card for their Netflix account for recurring payment, billed monthly.
B2B example) Business enter credit card for an email platform, billed annually.
EFT and ACH: Electronic fund transfer (EFT) is available across North America and adored by businesses and customers alike. From one bank account to another, funds are transferred almost immediately, with as little requirements as just an email address to make a payment.
Automated Clearing House (ACH) is a type of EFT used primarily for B2B transactions and payroll. Similar to EFT, ACH moves money almost immediately, but does so through the secure ACH network.
B2C example) Consumers give their gym their bank account credentials to remove funds every month.
B2B example) Business submit payroll and expenses to their staff.
We could also add to this list the good ol’ fashioned cheque but…… we’d rather not.
Because all payment platforms are different, you need to find the right fit for your business. Once you find the right platform, however, you can amplify your business not just locally, but internationally as well.
To implement the right payment system for your business, you need to know what’s best for your business. When it comes to accepting payments, Bambora has solutions for businesses and their customers. Just give us a shout; we can find the answer to help scale your business.