What to do with B2B payment processing?
Did you ever wonder how those billions, trillions and gazillions of dollars* of goods being purchased on B2B eCommerce websites get paid for? Are people using credit cards or ACH upon shopping cart checkout or are they buying on account with purchase orders and then settling the bill 30/60/90 days later? When they finally settle, are they paying online, sending checks via snail mail or what?
I’ve been thinking about this payments topic a lot lately. Maybe that’s because I’ve been forced to by five of our last six clients. It seems as if all of a sudden offering various payment options on our SAP Integrated B2B eCommerce websites has become the next big “Easier To Do Business With” (ETDBW) thing.
So here are my deep thoughts.
- Not all B2B businesses, and their websites, are created equal. Many of our clients’ sell through distribution networks that are three layers deep (Distributor then Dealer then Consumer). In the case where our website caters to distributors, they are perfectly happy with placing their orders that range from $10K-$250K on account with purchase orders. When our clients use their website to sell to dealers, they like to be able to offer both credit card and PO options upon checkout. Some small dealers prefer to pay by credit card because they love accruing those lucious reward points. Our clients like offering them credit cards because it offloads the credit risk onto the card providers, but that does come at a cost. Lastly, some of our clients are using our platform to sell directly to consumers and Paypal and credit cards are mandatory there. Some of our clients cater to all three customer types on our website so we have to provide all options in a configurable way and personalize it, via business rules, to the specific user. For instance, you don’t want to give a website user the ability to pay by credit card if he hasn’t paid his outstanding bills to you yet.
- No-one wants to become a headline. PCI compliant, PCI compliant, PCI compliant. The level of paranoia around being PCI compliant is at a fever pitch…and rightfully so. No one wants to explain to their boss why their customer’s credit card data has been compromised. This is complicated stuff and it’s not easy for Merchants (that’s what the Payment industry calls people who sell using credit cards…most of our clients think that they’re Manufacturers, but that’s a whole other story) to get their arms around all of the players, technologies, rules and processes involved in making sure that they are PCI compliant. Where there is complexity for our clients there is opportunity for Corevist and our partners! :-) By the way, we still have some of our clients who think that because they are only processing a few credit card orders per month that they don’t have to abide by the rules…especially since the rules are so complicated and difficult and expensive to implement. WRONG! You are at risk and… you know who you are.
- Paying at checkout is not the same as paying an invoice. Just because you’ve made the checkout process simple for your customers who pay by purchase order, that doesn’t mean you’re free to punish them with a manual AR process. To put it in more nouveau terms you’ve given your customers a digital purchasing experience, why not give them a digital account settlement experience to go along with it? And by the way, paying off invoices is usually not done with credit cards because you’ve already extended them the use of your money for 30/60/90 days, why would you also want to incur an additional 3% cost of the credit card transaction? The good news is that PCI rules don’t apply to ACH transactions…but you still need to be safe. Our experience is that the vast vast majority of these AR payments are not being processed electronically. There is big opportunity here for process improvement and in improving cash flow for our clients.
- It’s a numbers game. If you’ve decided that you have to offer credit cards and you have a plan to stay PCI compliant, then the next question you have to deal with is how automated do you want the process to be for your CSRs and Financial staff. These are the folks that live in SAP all day long and participate in fulfilling those website orders. If you’re only going to process a couple of credit card orders per day, than having the PCI compliant website authenticate and authorize your customer’s credit card in an automated way and letting your CSRs settle the charges manually when you ship is probably OK. Of course it starts to get less OK when those numbers go up from 5-10 per day towards 20-50-100 or more per day. It also becomes a little more complicated when you might have to deal with returns, credits, chargebacks on a regular basis. That’s when you want to take your credit card processing capabilities beyond simply posting PCI compliant authorization codes into SAP and really INTEGRATE your credit card processing with SAP. (See BluePay and Paymetric for two solutions that we support). With these SAP integrations, as you execute standard SAP transaction codes, as appropriate, all of the appropriate credit card transactions will occur automagically!
- It ain’t really all that hard. It used to be. But now that we’ve got more experience, and with a few partnerships that we’ve made over the past several months, it’s getting to be pretty straightforward. I used to be jealous of all of those B2C plug-ins that made it easy to integrate websites with payment gateways. Now that we’ve got one that supports 90+ payment gateways I’m not so jealous anymore. And what those B2C plug-ins were never able to do, integrate with SAP, we’ve got friends that make that pretty simple as well.
So that’s what I’ve been thinking about over the past several months.
Handling secure PCI compliant and SAP Integrated payments on your B2B eCommerce website shouldn’t be a science project. That’s a good thing, since I think we’re now officially past the dawn of the digital payment era for B2B eCommerce providers.
*According to Internet Retailer, the first ever compilation of the top 300 B2B eCommerce companies, calculates that in 2015, $547B of orders will flow through B2B websites. Those top 300 represent 70% of the entire B2B eCommerce flow.