The B2B Commerce Revolution: Online growth means moving beyond BACS and Commercial Cards with Pay by Bank and Payment Links

B2B commerce is undergoing fundamental change; B2B buyers are increasingly younger digital natives who demand eCommerce experiences akin to those they enjoy in their personal lives as consumers. But many merchants are ill-prepared; legacy technologies and processes are ill-suited to acceptable buying experiences. In turn, buyers are readily churning off long term suppliers in search of better digital buying experiences. One of the most significant shifts is the move away from traditional methods like BACS and commercial credit card payments towards innovative alternatives like Pay by Bank. For B2B merchants building an eCommerce capability, embracing new methods solves several challenges.

1. Traditional methods like BACS involve high friction for the buyer and also for Finance teams at the merchant who need to track and reconcile these transactions. 
2. Commercial card transactions play well with eCommerce experiences, however they incur expensive fees of 1.5% to 3.0% or more of the order value. And they can take 2-3 days for funds to settle into their bank account.

The Decline of Credit Card Payments in B2B Transactions

For decades, credit cards have been the cornerstone of B2B payments. They offered convenience and the ability to accept payments more readily. However, as businesses scale and transaction volumes increase, the limitations of credit cards become more apparent. High transaction fees eat into margins, while security risks and fraud vulnerabilities pose significant ongoing challenges. Moreover, delayed settlement means the reconciliation process with credit card payments can be cumbersome and time-consuming, leading to inefficiencies and errors that impact overall business operations and their ability to get their products delivered on time.

Industry trends indicate a shift away from credit cards. According to a number of recent studies, a significant number of B2B buyers are exploring alternative payment methods that offer better terms and enhanced security. This change is driven by a need for more cost-effective, secure, and streamlined payment processes.

Alternative Payment Methods Fueling Online Growth

Enter Pay by Bank and Payment Links. These modern payment solutions are transforming how B2B transactions are conducted, offering big benefits over both BACS and traditional credit cards.

Pay by Bank leverages open banking infrastructure to facilitate direct account-to-account transfers, bypassing the need for the traditional card networks. This method offers a seamless, secure, and instant payment experience for both merchants and buyers. For a detailed understanding of how Pay by Bank works for buyers, check out our comprehensive guide here.

Payment Links, on the other hand, provide a versatile way to request payments from buyers wherever they are. Links can be incorporated into traditional invoices, Merchants can easily send these payment request links via email, SMS, Whatsapp, or to whatever digital channel their buyers are mostly spending their time in. This gives their buyers the simplest and quickest way to settle their invoices and complete purchases.

Benefits of Pay by Bank for B2B Merchants:

• Cost Savings: One of the most compelling reasons for merchants to adopt Pay by Bank is the significant reduction in transaction fees. Unlike credit card payments, which come with hefty processing fees, Pay by Bank transactions are much cheaper (as low as 0.4%), allowing businesses to retain more of their revenue.
• Operational Efficiencies: By integrating directly into back office systems, eliminating the time-consuming manual tracking of transactions synonymous with BACS, Pay By Banks also saves merchants a tremendous amount of time, resulting in higher quality service and faster delivery speeds. 
• Enhanced Security: Security is paramount in B2B transactions, especially given the generally higher transaction sizes. Pay by Bank delivers robust security features that minimise the risk of fraud and chargebacks. With direct account-to-account transfers, the chances of interception and unauthorised transactions are dramatically reduced.
• Improved Cash Flow: Faster settlements mean better cash flow management. Pay by Bank settles same-day, boosting liquidity and helping businesses plan their finances more effectively by receiving their money in the bank days, sometimes weeks faster.
• Simplified Reconciliation: Streamlining financial operations is a critical benefit. Pay by Bank, when enabled within the same tool as conventional methods such as Cards, and wallets like Apple Pay, PayPal etc. unifies reconciliation processes, reducing the painstaking task of pulling down transactional data from multiple dashboards and normalising it for reconciliation.  

Benefits of Pay by Bank for B2B Buyers:

• Convenience: The ease of use associated with Pay by Bank is unparalleled. Buyers can complete transactions directly from their bank accounts without the need to enter card details, making the payment process swift and hassle-free. All details of the transaction are pre-populated for the user; they simply open their banking app, authenticate using the biometric of the banking app eg. Face ID. It’s both faster and more secure than other methods. For Accounts Payable users in larger buying companies (who typically don’t have bank access via the app) they can login to their online banking, execute the payment, and then have their preferred payment method saved for frictionless future payments. 
• Transparency: With clearer transaction tracking and real-time updates, buyers enjoy better transparency. This clarity helps in managing Accounts Payable and maintaining accurate financial records.
• Trust: Enhanced security features build confidence among buyers, recognising that their transactions are protected by advanced encryption and authentication protocols. A fully branded experience conveys the merchant’s brand imagery, colour schemes and logos, a slick user experience that builds trust that they’re paying the correct intended party.

Real-World Impact and Case Studies

For UK Fire Door Training, just 12 months after offering Pay by Bank checkout payment option to customers, approximately 10% of their monthly transactions are now processed through Pay by Bank. This feature has not only provided convenience for their tech-savvy customers but also contributed to significant cost savings for the business. With transaction fees for bank payments as low as 0.4%, UK Fire Door Training could redirect the profits no longer being eaten up by transaction fees into other critical areas of the business, such as marketing and product development.

“Within just a few months, ten percent per month of purchases are made via Pay by Bank now. It’s a growing proportion, and importantly for a lot of customers that might be the only reason they completed the purchase; because they didn't have a card with them for instance. In those cases not everyone comes back to the checkout; without Pay by Bank we could have lost that ten percent of revenue”
Jonny Millard (Managing Director) - UK Fire Door Training

Prior to working with Rvvup's Payment 3.0 platform, Celtic Timber were predominantly taking payments by card with relatively high transaction fees. Adding multiple payment methods to the checkout was a challenge and having multiple integrations and dashboards increased complication, time and resource spent on reconciling payments. In addition, they had no simple option to accept lower fee Pay by Bank payments via their WooCommerce store or through Payment Links. 

Fees were a notable cost that Celtic Timber wanted to reduce and at the same time they wanted to increase their payment choice at checkout without impacting checkout performance or increasing management and operational complication.

“Working with Rvvup has been a no-brainer for us. We are now able to offer highly secure payment methods that are aesthetically designed for conversion and also save us money. We have reduced our abandonment rate with this faster, more secure payment service for our customers”
Grant Goddard (Managing Director) - Celtic Timber

Summary

The era of BACS and credit card dominance in B2B payments is waning. As businesses strive for more efficient, secure, and cost-effective payment solutions, Pay by Bank and Payment Links emerge as the frontrunners. For ecommerce leaders, financial heads, and operations managers, embracing these innovative payment methods is not just a trend—it’s a strategic move towards future-proofing their business.

At Rvvup, we are at the forefront of this payment revolution, offering comprehensive solutions that simplify and enhance the payment experience. Explore how our Pay by Bank and Payment Links solutions can transform your business and join the growing number of B2B merchants who are paving the way for a more efficient and secure payment future.