If we talk in terms of business then, there are two types of payment cycles, and they are:
- Business-to-business (B2B) payments
- Consumer-to-business (C2B) payments
As the name suggests, B2B payments happen between businesses, whereas C2B is the usual payment cycle that we perform daily.
What happens with basic knowledge these days? Nothing because everyone is aware of the basics. Therefore, let's dig deeper to get a better understanding of B2B payments.
Earlier, business to business market was something that not many bothered about. But with years passing by, the B2B market grew, and people have started to understand the dynamics about how they operate and who are the competitors in the B2B market.
For instance, you are all set to start a mobile hardware business. Now, as you are stepping into the B2B market, your buyers will be mobile retailers, mobile repair shops, etc.
For suppose, you got five clients to work with, and you have started the work. After you deliver your clients as per the consignment, then comes the payment stage.
As a payment type, you only accept wire transfers.
Even though wire transfer is one of the secure payment methods, both end up giving up hefty forex (if international), taxes, and additional bank charges.
So, let's move ahead to understand the structure of the B2B world and how they operate.
What is B2B & how do they work?
To frame it simply the B2B is the trade cycle taking place between two businesses and has no customer intrusion in between. For example, Udaan is an Indian online marketplace that delivers goods only to retailers.
Udaan won't take orders from any Mr. Sharma or any other random customer who doesn't have an established store in the market.
Earlier, there used to be online stores and it took days or weeks to deliver. But, today we have dedicated B2B marketplaces. Some of the top B2B marketplaces in India are as follows:
- Global Trade Bazaar
Here, trade isn't restricted to Indian boundaries but has a foreign impact too. More than 30% to 40% of online trades happen through Indian and overseas businesses.
The B2B industry in India is growing so fast that Indian B2B startups account for 43% of Indian unicorns. Interesting, isn’t it?
What are the common types of B2B payments?
In this section, we will trail from the traditional B2B payment methods to the recent ones. Therefore, the types of payments are as follows:
It is one of the traditional payment methods, and it is still used by many because cash and wire transfer always have a special place in the hearts of Indians as it ensures security and reliability.
I know general stores in my locality, and they are into business-to-business dealings with Udaan. As they are in their 50's, they believe and urge B2B to accept cash payment as they are cautious about using UPI measures.
Even though cash is a traditional payment method, it still has a stronghold in the minds of the aged people because banks and cash have been revolving in their lives from their childhood till their pension phase.
It was also one of the most used B2B payment methods. Cheque payment is compliant with the bank. Therefore, it holds a level of credibility in the minds of Indians.
But, cheques are not used with much frequency as they used to be in past decades.
For instance, I am a steel seller in India and exports steel to a client in Singapore. Now, to receive payment, I use Western Union. This payment cycle is called a wire transfer, where the funds are transferred from one account to the recipient's bank in an electronically routed manner.
It might be a pricey deal for some, as they charge a hefty amount as forex and tax.
It is one of the most convenient and easy payment solutions as all you need is the card details to complete the payment (make sure whether the card payment is PCI compliant or not to avoid fraud).
If you are paying via credit card, it will help you in keeping track of the expenses at the month-end. Similarly, debit card payment will also help you in keeping a tap over your expenditures as it gives you the monetary paper statement.
We all know about digital payment platforms as we use them daily for C2B or peer-to-peer payments.
Digital payment solutions are in a rage as the number of digital wallets and online payment processing users are increasing day by day.
Due to COVID19 and the need to maintain social distance, contactless payments and deliveries have encouraged more than 70% of Indians to register themselves into one or more than one type of online payment tool.
For example, Vikram from India runs a business of organic fertilizers and exquisite plant seeds. Jake from London wishes to make a purchase. Now, Jake has to pay Vikram, and it is a payment from GBP to INR.
Let's assume that Vikram and Jake are PingPong users. Now, the benefit is that without any conversion confusion, Vikram can first receive the payment in GBP into his virtual PingPong account, and after 1-2 days, he can convert it to INR and withdraw it from his Indian bank account (don't think much we'll resolve the PingPong secret soon).
Therefore, these are some of the payment methods used in the B2B world. As we move ahead, let's understand the diversifying twists and turns in the business-to-business world.
Changing landscape of B2B payments market
There was a time when both, B2B market and payment options were restricted, within the bounds of technology and national boundaries. But, as the years went by technology started touching new heights creating history, and gradually the fintech market boomed with the latest payment measures that work beyond the international diversions.
Let's walk through the challenges and changes that the B2B world has witnessed.
As technology is upgrading itself, the fintech industry is also evolving and introducing payment measures. For instance, now you can pay via social media, watch, gesture, etc. Fintech growth is at a different level, isn't it?
But, at the same time, technology has injected impatience into the minds of the people. Technology in the fintech world means real-time processing, security, and transparency. Moreover, with technology advancements, the fintech finance market has witnessed a few challenges too, and they are as follows:
Earlier, when most of the population relied on banks, security was a term that coincided with the bank. But, after the coming of technology and such creative and quick payment methods, it has given birth to the modern e-thieves who have mobilized themselves with the technology and are ready to scoop out the loopholes to extract users' personal information and perform fraudulent activities.
Changing desires with advancing technology
When one can't decide how much is too much, people can't stay on a single option and would continue to hop from one to another experiencing the latest technology.
The impatience has clotted the minds of people resulting in imbalance and guarantee on any specific payment solution. Moreover, some people expect more as they are living in the era of customization.
Nowadays, it's hard to find a business that's restricted to a single demographic. Mostly every Indian business has or is trying to track down business clients in the foreign turf. Therefore, owning a cross-border friendly payment solution has become a mandate.
For instance, as a B2B partner, you are using a cross-border payment solution that charges you over 4% - 5% in the name of forex. Be it a small or big payment, such a hefty forex rate could gradually create a hole in your pocket.
Cost and pocket-friendly payment solution is something that businesses look for because cheap and best is the need of the market.
Tips for B2B to manage payments in a better manner
After understanding the arriving and existing challenges in the B2B world in respect to the monetary deeds, let us get down to the solutions of how the businesses could mend their finance graph by using the following tips and tricks:
Never overlook the forex!
Forex is a trillion-dollar economy that is growing year by year because people like you are happy to pay a high forex rate. If you continue to make this mistake, it shall result in a catastrophic blunder when you sit and calculate the money you lost under the garb of forex.
Several payment solutions have hidden charges included in their forex and taxes. Therefore, always analyze your options closely.
If you do qualitative research, you can find several other payment solutions in fintech that charge competitive forex rates along with other additional benefits. If you invest your time meaningfully in finding the best-suited payment solution, then you can sit back and enjoy the gradual savings.
Opt for e-payment solutions
Keep the payment solution that suits all. And, digital payments are something that is used across the globe.
Apart from opting for digital payments, you should also include the most common types of payment solutions that could act as an easy, instant, and secure payment bridge (national or international).
Moreover, digital payments:
- Gives you an instant payment confirmation
- Doesn't need a green signal from the bank's working hours to facilitate payment.
- Reaches the recipient's bank account in a faster manner, as compared to a bank transfer.
Your payment platter should be inclusive!
Yes, never serve your client with a haphazard option. Let it be inclusive of all payment types so that both parties can opt from the many that suit them.
There are different types of payment methods such as:
- Wire transfer
- Contactless card payment
- ACH transfer
The list goes on. Rather than creating tension in limited payment options, offer them all the favorable types of payment options to your clientele.
PingPong: Best out of the competitive B2B payment solutions
PingPong is a six-year-old cross-border payment solution that would help you to receive and withdraw money in your local Indian bank account in INR, USD, GBP, EUR, CAD, AUD, and JPY securely and transparently.
Don't worry because we won't leave you hanging mid-air by just throwing the feature, but will tell you why you should consider PingPong as your long-term payment solutions partner.
The reasons are as follows:
- PingPong provides free signup and offers zero monthly or yearly maintenance fees.
- It is licensed and regulated by the necessary financial institutions. In India, PingPong runs as per the Reserve Bank of India's regulations.
- For instance, you are an Indian B2B dealer dealing with a business in America. PingPong would create a virtual monetary window for the Indian user in America, where you can easily accept payments in USD without any currency and conversion confusion.
- Once the payment happens, it directly hits your Indian account, and you can withdraw the amount based on the best market.
- After every transaction, you will get a free digital Foreign Inward Remittance Certificate (FIRC). No more standing in bank queues.
- You can handle multiple currency dealings in one PingPong dashboard.
- Efficient and knowledgeable customer care is available round the clock.
- Pay VAT and GST without any conversion confusion.
- All these perks are offered at a highly competitive forex rate.
Moreover, PingPong has a conversion calculator that will help you to understand the exact amount you shall receive in your bank account post the forex deduction (it maps the conversion based on the latest market rate).
Too much to take in one go? Don't worry because PingPong offers a responsive and easy-to-use interface.
- You sign up for free
- Wait for 24 hours for account approval
- Set up your receive account (whichever currency you want to receive your payment) and start getting paid.
However, if you face difficulty setting up your PingPong account, contact the PingPong assistance team at firstname.lastname@example.org.
Now, when we say that PingPong is a secure platform, it isn't a bluff because they ensure:
- Encrypted two-factor authentication
- SMS verification access for high-level account features and information
- Unique PIN Verification requirements for all the major activities, including sending and withdrawing money.
Are these legit reasons enough, or do you need more?
If yes, then click on this link to know more about this gem in the fintech market - https://in.pingpongx.com/in/customer-success-stories
Only when you plan efficiently; then only you can execute rightly. Therefore, let every ace of your game be set right.
Be it having a business idea, understanding your niche, or understanding the payment solutions and trends, lapse over the research can cost your pocket.