Myths & Facts About Credit Cards

Jan 24, 2023 by Sage Thee

For better or worse, we’ve accepted credit cards as a business necessity. But how much do we really know about them and their complicated processes and fees? Are there better options out there for B2B payments than credit cards?

Myth #1:
Credit cards are the best option for B2B payments.

Fact #1:
Credit card fees and the labor required to manage them continue to rise. These fees are frequently undercutting your profits and waste time that could be spent on more high-level tasks.

You could be losing anywhere from $30,000 to nearly $2 million yearly to credit card fees alone.

Considering the entourage of fees credit cards bring (processer, interchange, assessment, and authorization fees), you may find your credit card fees piling up at the end of every month.

Further, credit card fees present a new set of challenges regarding month-end close. For example, how do you apply or pass the credit card fee? How do you reconcile each transaction to each fee when your credit card statement doesn’t break down by invoice number?

What if my ERP takes care of that for me?

ERPs are great, but they’re not perfect. For instance, most handle credit card fees in the form of processing and interchange fees you have to pay. Plus, they don’t automatically collect credit card transaction information, so data has to be added manually.

Myth #2:
Credit card transactions are the most efficient payments.

Fact #2:
Credit card payments are routed through several channels, making transactions vulnerable to delays, chargebacks, and fraud.

At first, credit cards look like the fastest, simplest, most efficient payment method. But when you consider all the tiny moving parts involved, credit card payments get complicated fast.

There’s an advanced and complicated web built to handle credit card processing. When a credit card transaction occurs, the payment is routed through several different channels:

The B2B payments landscape is changing rapidly as traditional payment methods fall out of use in favor of automated, digital options. When comparing an instantaneous, secure, and low- or no-fee digital payment to the song and dance required for credit card payments, it’s easy to see why clients have increasingly high expectations for B2B transactions.

45% of all B2B transactions were made digitally in 2022, and Gartner predicts that 80% of all B2B sales will occur in digital channels by 2025. Your clients want B2B payments to be as easy as B2C payments, if not easier. And when looking for features like intuitive interfaces, simple account setup, real-time payment processing, transparent and secure transactions, and mobile phone compatibility, you’re not going to find that in a credit card.

Myth #3:
Credit card fees aren’t really hurting my business.

Fact #3:
A single 3% charge may not make much difference, but hundreds of 3% fees quickly add up until you could be losing up to $2 million annually to credit card fees.

B2B credit card fees range between 1.29% and 3.3% per transaction. These percentages may seem low, but in the context of the high volume B2B transactions often carry, a shift of even 0.1% can save or lose your company thousands of dollars.

Credit cards are a bit of a vicious cycle — the more you use them, the more processing fees you pay. If you push for credit card payments as you grow, your credit card volume will grow, too — which means the processing fees will also increase. Reconciliation headaches will worsen, making it challenging to scale as your business grows.

Myth #4:
There aren’t any good alternatives to credit cards right now.

Fact #4:
Plenty of digital payment options allow you to break free from restrictive legacy payment architectures.

Zero-touch digital payment options — like digital wallets, direct bank payments, and integrated B2B payment platforms — allow you to break free from restrictive legacy payment architectures, speeding up the payment process, reducing fees, and cutting back the amount of manual data entry.

Digital, user-friendly payment features result in less cumbersome processing tasks for AR teams and happier customers. For example, when an invoice is generated in your ERP of choice, a workflow can automatically email it to the customer. Then, customers can pay the invoice directly through an embedded payment link. Finally, both your ERP and payments platform will automatically reconcile the payment.

Zero-touch digital payments look like this:
  • 52 fewer hours spent processing payments
  • 25% fewer payment-related phone calls
  • 50% shorter month-end close

Myth #5:
Credit cards come with a host of drawbacks and inconveniences, but there’s nothing I can do about it.

Fact #5:
Paystand has got you covered.

You should be in control of your finances, not the card companies.

Here at Paystand, we built our business on how payments should be, not how they’ve always been. There’s no reason businesses should lose a percentage of their every sale to transaction and convenience fees, so we built a payment infrastructure that eliminates them.

Learn more about Payments-as-a-Service | Learn more about the Paystand Bank Network

It’s time to say goodbye to costly and unnecessary credit card fees. Our Eliminating Credit Card Fees Starter Pack will teach you everything you need to know about credit cards, their fees, and how to reduce and eliminate them, as well as the future of B2B payments and why ditching traditional payment methods is the best solution for your business.

Eliminating Credit Card Fees Starter Pack

The Future Beyond Credit Card Fees

The Truth about Credit Card Holds


Your Guide to Credit Card Fees and How to Eliminate Them

Credit Cards: A Necessary Evil, or a Thing of the Past?