7 types of B2B payment methods for your business

What are B2B payments?

Business-to-business (B2B) payments are transactions made between businesses, as opposed to transactions between businesses and individual consumers (B2C).

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An example of a B2B payment would be a content marketing agency paying a subscription fee to the NY Times. B2B payments can be made for services, products, or anything else a business may need to acquire from another business.

How do B2B payments work?

B2B payments occur when one business provides goods or services to another business, followed by an invoicing process where the providing business issues an invoice to the purchasing business detailing the amount due and payment terms.

Payment methods for B2B transactions include options such as bank transfers, checks, credit or debit cards, or online payment platforms. The processing time can vary widely, depending on the payment terms like immediate payment, net 30, or net 60, and the chosen payment method.

Once the payment is made and received, it's recorded in the financial records of both businesses, marking the transaction as complete.

In the list below, we’ll explain 7 of the most popular B2B payment methods, along with their pros and cons.

7 most popular B2B payment solutions

Each of the following B2B payment methods remains in use today, though their efficiency and security levels vary. Here’s what to know about each payment type and how it works.

1. Cash payments

Digital payments are on the rise, but cash payments are still used by many small businesses. Paying in cash is easy, accessible, and eliminates any transaction fees.

However, cash payment processing can be difficult to track, complicating budgeting and accounting in the long term. Plus, they can negatively impact cash flow, since money that’s spent is immediately removed from your balances, rather than at your discretion (as with credit options).

2. Paper checks

Another well-known payment option is the paper check. Checks offer a few benefits, including:

• A concrete paper trail that’s easier to follow than cash or digital options
• Flexibility in scheduling, as checks can be deposited at your leisure
• No need for a bank account to cash checks, for any party

However, checks have their drawbacks. They can be time-consuming to process and are prone to human error, which can further delay payments. Plus, checks sent by mail present a security risk since they can be intercepted, altered, or stolen, leading to payment fraud.

3. Debit cards

Similar to cash and checks, debit cards pull directly from your business checking account. Debit and credit card payments are typically the go-to method for B2C payments. They can be thought of as digital cash payments, making them the halfway point between cash and wire or ACH payments.

Debit card payments offer immediacy and ease of use, with automatic record-keeping aiding in the reconciliation process. However, they can come with transaction fees. Additionally, they may not be ideal for large transactions due to daily spending limits and a lack of flexibility in payment terms, unlike checks or credit terms which allow for delayed payments.

4. Wire transfers

Wire transfers are the standard for large B2B payments, especially international transactions. Wires are flexible, since they can be initiated from a bank or non-bank financial institution, and all you need is the receiving account’s information.

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However, if you plan to use wire transfers, you'll likely incur additional costs since you'll typically pay a processing fee to initiate the payment, and the recipient may be charged as well.

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Wires are a secure form of real-time payment, but one problem is that they can’t be refunded or cancelled once initiated. For this reason, wires are best suited for infrequent rather than recurring or bulk business payments.

5. Automated Clearing House (ACH) payments

Another common form of B2B electronic payment involves the automated clearing house network. Overseen by the regulatory body Nacha, ACH payments function similarly to checks or bank transfers, with excellent security. ACH is often used for payroll services, such as direct deposits.

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ACH transfers and wire transfers are similar, and in some cases, the terminology is used interchangeably. However, there are some important differences between the two:

• ACH transactions tend to be significantly cheaper than wires, and often free.
• ACH typically takes longer to process than wire transfers.
• Unlike wires, ACH transactions can be refunded or cancelled by either party.
• Whereas wires can be cross-border, ACH is limited to domestic transactions.

These factors make ACH an ideal baseline method for recurring payments or bulk B2B transactions that occur domestically. Many businesses use ACH for their regular transactions, opting for wires, checks, cash, or other methods for special, niche, or infrequent payments.

6. New B2B payment platforms for payment processing

Online providers through financial technology (fintech) platforms offer quick and secure payments, which can be integrated into checkout processes for e-commerce businesses.

Some of these payment providers for small businesses, startups, and e-commerce businesses include:

• PayPal: The industry standard for over two decades, PayPal is a B2B online payment platform built specifically for business transactions. It doubles as a peer-to-peer (P2P) payment network.
• Venmo: Owned by PayPal, Venmo emphasizes P2P payments and is not intended for business use by regular accounts. 
• Cash App: A part of Square’s suite of business services, this payment option emphasizes privacy, security, and accessible business functionality.
• Google Pay: This B2B payment system prioritizes ease of use and integration with other G-Suite applications and services, such as Gmail.
• Stripe: Stripe facilitates B2B transactions with APIs enabling customized payment solutions and integrations with other business tools.

However, the major drawback here is cost: These platforms charge a flat fee or percentage per transaction, making them more expensive than most other options for B2B payment processing.

7. Corporate cards

As a payment method, corporate cards offer easy tracking and expense management, along with rewards or cash back on transactions. They provide a short-term credit option, aiding cash flow management, and allowing for simplified expense reporting and approval processes.

The only consideration to keep in mind is whether your credit limit will support your B2B transactions. If your credit limit is too low, it may not cover the cost of significant purchases or recurring expenses. This problem can be easily avoided by making sure your limit is high enough when you get your card.

Streamline B2B payments with Ramp

Ramp's accounts payable software automates your B2B payment workflow so every bill is recorded, approved, and paid without manual data entry or repetitive tasks.

With Ramp, you can consolidate all of your payment methods into a single platform. Pay domestic and global vendors by card, check, same-day ACH or international wire.

Our platform also integrates with popular accounting solutions like NetSuite, QuickBooks, and Sage Intacct to auto-sync bill pay transactions, pull-in purchase orders, and amortization schedules, streamlining your accounts payable workflow.

Use Ramp to power your B2B transactions and see how much you can save.