How to Save Money on B2B Credit Card Processing Fees

Jun 2, 2023 by Brandon Jones

High credit card processing fees can significantly impact the profitability of B2B businesses, cutting into profit margins and harming competitiveness. However, effective and budget-friendly payment options can keep processing times short without triggering excessive fees.

Unnecessarily high credit card processing fees frequently undercut B2B profits. These fees can drastically cut profit margins, damaging businesses in highly competitive markets. But effective, budget-friendly payment options can keep processing times short without triggering high fees.

Here's how Paystand solves your B2B credit card processing problems.


How Credit Card Processing Fees Affect B2B Companies

Excessive B2B credit card processing fees are among the worst problems for vendors. The processing fees likely come from your revenue. Credit card payment fees may be more costly than you think, depending on your company structure, the volume of transactions per month, and each transaction's value.

Besides the frequency, prices can drastically affect final revenue. Depending on the credit card processor, companies can be charged from 2.5% to 4% of a transaction amount. Considering most businesses target a profit margin of around 10%, this means losing part of the revenue to processing fees. High credit card processing fees cut the net profit margin even more if the company is in a highly competitive market.


Traditional Methods to Avoid High Processing Fees

High credit card processing fees are standard today. Here are a few ways companies counteract fees impacting their margins.


1. Passing the Cost to the Customer

Some companies protect their net revenue by increasing the cost of their products or services. This comes in either increased surcharges for purchases or universally higher prices for all parts of a business.

If customers are willing to pay the increased rates, this is a great way to maintain margins. But consumers always try to get the most from their money so this strategy could cost customers.


2. Compare Options

CFOs, CEOs, and accountants will look for better payment options when rates are too high. There are many credit card payment processors, and there's always the potential that another processor will have lower fees.

Yet, while comparative shopping may reduce them, it doesn't remove the inherent problem of the fees. Just because a problem is smaller doesn't mean it's been resolved.

Additionally, this is not an option for smaller businesses. Because fees are typically determined by your purchase history, volume, and amount, new companies can't establish enough credit history to qualify for lower fees.


3. Avoid Using Credit Cards

If fees get too high, companies refrain from using credit cards and ask clients to pay with slower options like checks. While this does help both parties to steer clear of processing fees, it creates a new problem: check payments take more time to process. You may have avoided the fee, but your DSO goes up.


Modern Solutions to Avoid Processing Fees

Since processing fees are such a problem, there are new solutions that help businesses make the transactions they want without paying high fees. Here are a few modern solutions that better answer credit card processing fees.


1. Flat-Fee Processing

Rather than paying a fee for each payment, some processors request just a flat fee. With this option, a business can accept as many credit card payments as they would like while only paying a monthly fixed fee.

This is a good option for companies that are through with losing revenue to processing fees but still want to offer their clients the convenience of paying by credit card.


2. Fully-Digital Payment Options

Fully digital payment options, like PayPal or Venmo, are becoming more popular in B2C transactions because they provide a fast electronic solution that avoids high processing fees.

Fully digital payment options are not limited to B2C transactions, however. There are B2B digital payment options, like Paystand, that provide the same benefit while also supplying:

  • Higher payment security
  • Faster payment processing
  • Low risk of fraud
  • Improved transparency
  • Contactless payment

Eliminate Processing Fees and Save with Paystand

Paystand makes it so you never have to pay transaction fees again. We help your business digitize your receivables so you can accept more payment methods and move your entire process to the cloud, freeing up your time and money to focus on what matters most: making more of it.

Read our eBook to learn more about the savings available when you move toward digital payments instead of credit cards.