Where B2B, e-commerce, and payments intersect

We’ve discussed many times on these pages the complexities that manufacturers face when trying to implement an e-commerce solution — even for manufacturers uninterested in selling directly to consumers, the influence of business-to-consumer (B2C) e-commerce are rapidly pressuring even those that do only business-to-business (B2B) interactions to set up e-commerce sites.

And, like it or not, these B2B e-commerce initiatives are being judged by the standards set by Amazon and other retailers.

While B2B and B2C e-commerce buying may share a common shopping and check-out experience, the under-the-hood fundamentals are not the same — the ways that a company might implement the right features in each situation, while generating the highest return on investment (ROI) possible, depends, in many ways, upon those internal functions.

And the prospect of making the right B2B decision still stumps many companies.

One of the central components of e-commerce is payment processing — a complicated issue that is one of the critical functions in the back-end of any system. It’s a complicated issue, but, fortunately, there are solutions available to help manufacturers develop best practices and implement systems that not only better serve their customer, but also lower costs and increase productivity.

But before we delve into the nuances of payment processing, it’s critical to outline the differences in the business and consumer payments themselves.

B2B vs. B2C cards

At the core of the B2B vs. B2C debate are the different types of cards buyers use. Consumers are issued consumer debit, credit, and reward cards, while businesses give employees commercial card products like small business, corporate and purchasing cards (also known as P-Cards) to keep business expenses separate from personal ones.

Commercial credit cards are becoming increasingly important to the way many companies acquire the goods they require.

Research suggests that P-Card use is expected to balloon to $290 billion by 2016, with more than 84 percent of organizations adopting some form of a P-Card policy.

One driving factor is e-commerce itself — the simplicity of ordering online is creating higher demand for card-based purchases, even as invoicing and billing are moving from paper to electronic processes.

For buyers, P-Cards can make a big difference on the bottom line — a survey of 1,300 purchase card program administrators found a $53 administrative cost reduction when using P-Cards over processing paper invoices. Manufacturers and distributors doing the selling are finding e-commerce payments equally compelling. There are a multitude of benefits, such as funding time being reduced from days to months, dramatically reducing the amount spent on collections and spending less to finance trade credit until payments are received.

So, any company doing B2B transactions can expect P-Cards to quickly become the standard, if they haven’t already. Yet when accepting commercial card payments, these transactions require more details about what’s being sold than a consumer card purchase in order to qualify for the lowest possible Interchange rates as set by MasterCard and Visa.