For B2B Sellers, Merchant Fees Can Enable Working Capital for Buyers

In the business-to-business (B2B) space, a seller’s ability to accept credit cards and debit cards with no merchant fees — instead shifting the fees to the payer — can have benefits for both sellers and payers, Aditya Mishra, vice president of product management at Plastiq, told PYMNTS.

That’s a capability enabled by the Plastiq Accept Virtual Terminal, which helps legacy businesses accept credit cards with no merchant fees. Plastiq also accepts ACH deposit or wire transfer, and shifts the cost of merchant fees to a company’s customers.

For payers, they’re paying a supplier who hadn’t accepted cards, but they’re buying themselves 45 to 60 days of float, with quick access.

“It’s like working capital in your wallet,” Mishra said.

For suppliers that have been unwilling to pay the fees, this enables their payers to pay with a card if they also pay the fee. Other suppliers use the fees as a tool to speed up payments, negotiate discounts or negotiate payment timelines. For example, if they want to get paid early, they call the payer and offer to pay the fee or split the fee if the payer makes the payment immediately.

“So, the fee becomes a resource,” Mishra said.

Use Cases for Virtual Terminals

The Virtual Terminals have three common use cases, Mishra said. One is for businesses such as manufacturing companies that were struggling with collections and didn’t have a way to initiate charges on their side. With the terminal, billers keep credit cards or payment files on the systems and automatically charge them when payments are due.

See also: Plastiq Debuts No-Fee Virtual Payments Terminal for Legacy Businesses

Another application is logistics companies that previously would dispatch goods and collect checks or cash when the goods were exchanged. Now, with the terminal, this shifts to a phone call or a QR code payment that is hooked up directly to the terminal.

“So, cash facilitation is also now being enabled on the ground,” Mishra said.

A third common use case are businesses that are dealing with customers who are not tech savvy and are not going to go online to pay. For these businesses, the terminal enables those customers to make payments quickly and easily.

“These are the top three use cases we’re seeing at the moment,” Mishra said. “Obviously there’s going to be more — we’re seeing more and more traction with the Virtual Terminal, and we’ll see much more adoption, especially in the wholesale and legacy industries, as we continue to scale.”

Deploying Software Development Kits

With software development kits (SDKs), like those available from Plastiq, businesses can add prebuilt tools, features and functionalities to their apps, gaining access to a large set of features and capabilities without having to build them from the ground up. All operational aspects of risk and compliance are handled by Plastiq.

This is a solution that is gaining traction with businesses that don’t have large technology teams and know that’s not their core business. Mishra said companies can partner with Plastiq, hook its SDK into their existing tools and go live with a broad set of capabilities within weeks or even days, rather than months.

“Suddenly, they get payments, they get cash flow insights, they get automatic accounting reconciliation — all of that with one or two lines of code, which is something even small tech teams can get online very, very fast with,” Mishra said.

Related: How All-in-One Platforms Can Lower the Cost of SMB Payments

Introducing a Whole New Dynamic

With innovations like these, the shift to virtual is introducing a whole new dynamic for both buyers and sellers, Mishra said.

In the digital world, both can partner with capabilities that would have been absent in the physical world. For example, when buyers want to delay their payments as long as possible, while suppliers want to get paid faster, there are external companies that are willing to offer float on both sides.

“So, what was just convenience when we began this digital shift now has changed to more and more opportunities,” Mishra said. “You have people who are enabling cash flow, invoice factoring, people who are speeding up payments for you, who are giving real-time tracking — all of these things which were previously unusable in the physical world are now certainly getting possible when you move online.”

Making the Digital Shift

In payments, the digital shift required companies to overcome the problem of cost, and then the problem of risk. Now, it’s becoming more and more a problem of education and cultural shifts.

“Even companies that were technically challenged, who don’t have big tech teams, who felt that they would have to have significant IT investments or expenses to move their payments online now are certainly opening up to the fact that, ‘Hey, these things are much faster and easier to do, which would have been impossible or technically a big mountain to climb a few years back,’” Mishra said.