How to Save Money on B2B Credit Card Processing Fees

Feb 10, 2022 by Brandon Jones

Unnecessarily high credit card processing fees frequently undercut B2B profits. For any business, these processing fees can drastically cut your profit margins, which can be damaging in highly competitive markets. However, more effective, budget-friendly payment options can help keep processing times short without triggering high fees.

Here’s how Paystand provides the solution to your B2B credit card processing problem.

B2B Credit Card Processing Fees

Excessive B2B credit card processing fees are among the worst problems for vendors. Most likely, the processing fees come directly from your revenue. Depending on your company structure, the volume of transactions you make a month, and the value of each transaction, credit card payment fees may be more costly than you think.

In addition to the frequency, your prices can also drastically affect your final revenue. Depending on your credit card processor, companies can be charged from 2.5% to 4% of a transaction amount. Considering that most businesses aim to run at a profit margin of around 10%, this could mean you are losing part of your revenue to processing fees. If your company is in a highly competitive market, high credit card processing fees could be cutting into even more of your net profit margin.

Traditional Solutions to Avoid High Processing Fees

High credit card processing fees are standard in this day and age. Here are a few ways companies choose to counteract fees impacting their margins.

Pass the Cost to the Customer

Some companies choose to 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. However, consumers are always trying to get the most from their dollars—so this strategy can potentially cost you customers.

Shop Around

Savvy CFOs, CEOs, and accountants will shop around for better ones when rates get too high. There are many credit card payment processors, and there’s always the potential that another processor will have lower fees.

However, while comparative shopping may slightly reduce the fees, 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 often not an option for smaller businesses. Because fees are typically determined by your purchase history, volume, and amount, new businesses may be unable to establish enough credit history to qualify for lower fees.

Avoid Using Credit Cards

If fees get too high, companies will avoid using credit cards and instead ask clients to pay with slower options like checks. While this does help both the payer and the payee 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

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 providing a better answer to credit card processing fees.

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 single set fee each month.

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.

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

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 receivables process to the cloud, freeing up your time and money so you can 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.