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How to accept credit cards and avoid processing fees for B2B

A small business owner using a laptop to pay her bills online with a credit card.
Tofi Stoler
Published at | Updated:

Can you remember the last time you paid by cash, nevertheless wrote a check, for a personal payment? Neither can we, as most consumer transactions are done with a credit card. But, when we turn our gaze to business-to-business (B2B) payments we see a completely different picture.

Paper checks are still the most dominant payment method, used by more than 80% of companies. Credit cards are used by less than half of companies for business purposes, representing a single-digit percentage of B2B deals.

How is this possible? There’s no way businesses don’t see the many advantages of using credit cards for business payments. These include the ability to improve cash flow by holding onto cash longer until the card’s next billing cycle and collecting card perks and cashback on large transactions. 

In this article, we’ll discuss what you as a small business can do to accept credit cards for B2B transactions, how that can help your business, and how much it’ll cost you (spoiler alert: as little as $0 if you do it through Melio).

What’s stopping B2B credit card payments?

The blocker here appears to be the vendors and suppliers that are set to receive these payments. Business-to-consumer (B2C) businesses feel they have little choice but to accept credit cards in some form or another or they’ll lose customers. B2B companies, on the other hand, are less inclined to change their ways. They’re even more reluctant when taking into account card processing fees that can affect their bottom line. 

That’s a shame because accepting credit cards is not just good for the payor. B2B customers who want (or maybe even need) to pay by card might decide they’re taking their business elsewhere to find the flexibility they need. So, not accepting credit cards might actually be costing businesses like yours a lot of money in lost revenue.

Credit card transactions are also processed on the spot so vendors can get payment confirmation instantly, eliminating the days or possibly weeks of waiting for checks to arrive in the mail and then get processed by the bank. Checks can also get lost or stolen, or simply bounce, further distancing you from the money at the end of the tunnel.

How businesses pay businesses, and why they’re doing it wrong

We’ve established that B2C businesses are typically more flexible with their payment methods. Even if they choose not to work with traditional credit card processors to avoid high fees, they have more options, like accepting money via consumer mobile payment apps. Business transactions are more complex and typically have a higher volume, making these options less viable. 

While consumers enjoy a multitude of options at their fingertips, businesses are typically left with cash, bank transfers, or paper checks. 

Here’s why each of these options isn’t always ideal for business payments:  

  • Cash. B2B is all about volume. You’re either selling in bulk (for example, inventory) or dealing with pricey equipment and services a private consumer has no need for. That means your customers may need to carry around suitcases full of money to pay in cash, which may not be safe or even feasible in most cases. 
  • Bank transfers. ACH bank transfers are a great, inexpensive way to pay the bills. But, they’re also slow, taking several business days to process. This makes them less appealing when a bill is due or there’s an early bird discount to collect. Wire transfers are much faster, arriving within 24 hours, but they’re expensive and usually cost around $25-$35 per transaction. 
  • Checks. Everybody’s favorite payment method is often subject to fraud and theft. It’s also cumbersome, prone to error, and surprisingly expensive, costing businesses between $4 and $20 per check

Why B2B businesses need to accept credit card payments

Better cash flow, card rewards, convenience, and habit are just a few of the reasons why your business customers may want to pay you with a card. 

Why should you accept? Mainly, because you just don’t want to leave money on the table and lose business. Flexibility can be a serious business advantage, attracting new customers and preserving your existing clientele. Better payment choices also mean better relationships with your customers, translating into more sales and referrals.

As we already mentioned, credit card payments are also fast, giving your cash flow a boost when you may need it.

How much does it cost to accept credit cards?

Credit card processing fees may vary according to the type of card being swiped, your payment processor, and the overall volume of your transactions. Online transactions are usually more expensive, as they pose a greater fraud risk to credit card companies. 

The overall cost of accepting credit cards amounts to anything between 1.5% and 3.5% of the transaction, which can add up, especially for larger B2B payments.

Types of credit card processing fees

Three main types of credit card processing fees go into the final amount typically charged to the recipient of the payment: 

  • Interchange fees. Charged by the card issuer for each swiped transaction. 
  • Payment processor fees. These usually include a monthly subscription as well as an additional per-transaction fee, charged by the company that processes the credit card payments for your business.
  • Assessment fees. A monthly subscription charged by the credit card network to facilitate the communication system used to process transactions. The type of subscription determines which credit cards you can process.

Can I get that for free instead?

Absolutely! With Melio’s digital payment platform, you can accept credit cards for B2B transactions without paying any processing fees. 

So, how to avoid credit card processing fees, you ask? Just use Melio to process incoming B2B payments and give your customers the choice to pay with a credit card.1 You’ll get the money directly to your bank account within a day. When setting up your account, you can choose whether you want to cover the 2.9% credit card fee or charge it to your customer. 

In other words, your business customers can choose to pay you with a credit card and it won’t cost you a thing. They enjoy the added convenience and improved cash flow, while you get the full amount directly to your bank account.

More choice for your customers, zero cost to you

Give your customers all the options without affecting your workflow or costing you a penny. Sign up for Melio today to start accepting credit card payments from your B2B customers for free. 

*This blog post is intended for informational purposes only and is not intended as financial advice.
**Melio does not provide legal, tax or accounting advice, and you should consult with a professional advisor before making any financial decisions.