What are B2B Payments?

With the number of payment options available in the market right now, there are always so many ways for a business to choose how and where they want to do a transaction.

You can do it via traditional ways: business checks, credit, or debit cards.

Or you can choose to do it in the newer ways: ACH, wire transfers, and more.

The list goes on and on. 

But the landscape for b2b payments seems to be changing again with more and more companies moving their businesses online.

And how are businesses coping with this new digital scene in the market?

It’s not without reason that digital payments are taking over the scene right now.

Different parties - employees, customers and companies, suppliers, outsource talent, and vendors, they’re all looking for a more accessible, personalized payment option that they can access online anywhere and whenever, and on whatever device with high security.

And it’s not only about convenience, it is also a matter of transaction speeds.

It is especially looked upon when businesses these days emphasize delivering real-time results.

Now, since the shift from paper to virtual cash wasn’t exactly short, therefore we have laid out a few key dates and developments for you below. 

It was first started by the launch of American Express back in 1850, which was then followed by the very first bank card in the 1920s and here we are now, from 2012 to 2014, the official business credit card and it has now counted up to 10% of all B2B payment. 

And there is one thing that you can NOT talk about when it comes to business payments, and that is - ACH.

ACH originally started off in 1974, and till 2014, it has grown to 22 billion in payments.

And in the very same year, PayPal also introduced a new payment option that fosters mass payments in businesses.

Another example of invoicing is the launch of Software-as-a-Service (SaaS) platforms in the early 2000s.

The past B2B payment history mentioned above has slowly shifted the B2B payment scene into a digital landscape.

However, not every business has completely abandoned the traditional way of payment. 

Here is the timeline of the history of B2B payments:

Here’s the advantages and disadvantages of the 5 main ways of B2B payments (electronic funds transfers, checks, ACH transfers, online payment platforms, credit cards) :

Now, you might be thinking of which B2B payment methods to use after looking up at all those pros and cons.

But when you’re considering, you should also check out these 5 key frauds that are commonly used in the terms of B2B payments:

1. ACH fraud

Basically, ACH fraud usually has something to do with the stealing of customers’ data. 

And of course, criminals will only step up on their cyber tricks to keep up with that.

For example, the common tricks of cybercriminals often involve keystrokes, hi-tech malware, or they will somehow convince customers to enter sensitive account information such as bank log-in details. 

Since these types of frauds will usually hold the banks directly accountable for their clients’ losses, therefore, banks are more willing to invest in more security in order to support that.

2. Digital platform fraud

It is rather rare for criminals to perpetrate fraud only specifically targeted at digital payment platforms.

The reason for that is that the platform made it extremely hard for criminals to know which business is using which platform due to the incredibly diversified market.

Now, there are few things you can do to counter or be more aware of these frauds.

In case of a fraudulent or hacking incident, you should always ensure that your funds can be recouped at any time and be aware of phishing emails at all times.

3. Credit Card Fraud

Credit cards are safer than ever these days, with advanced technology invented by the banks including chips, magnetic strips, pin technology incorporated in credit cards nowadays.

This has made it incredibly hard for criminals to use your stolen credit cards repeatedly, especially for small-time thieves.

That’s not the best thing.

Banks are now punishing retailers who still insist on using older versions of credit cards responsible for any type of losses due to fraud. Brilliant, isn’t it?

4. Wire fraud

The how-it-works for wire fraud is pretty cliche and you should definitely not fall for it, and here’s how it goes: con-artists will probably give you a call, claiming that they’re the representative of the credit card or bank company.

And then what they do is that request you, aka the victim, to confirm (again) your personal information over the call for some ridiculous reason. 

The criminals really would go the extra mile: they would even make an email that looks really professional to your business, claiming to be from one of your suppliers.

To make it look more realistic, they would even hack your corporate email system to create those legitimate-looking emails.

So, you should definitely lookout for that.

5. Check fraud

Now, what’s better than the good old cheque frauds. Funny enough, these traditional frauds tend to have the highest value among all. 

One trick that criminals are always using is this - paper changing.

What it means is that they would write checks on closed accounts in order to make it more sophisticated.

The most common type of B2B payment fraud done by checks is done by "check kiting'.

Essentially, what it is is that the main victim is the banks but also businesses that use checks to accept or make payments. 

Relating to ACHs, checks, digital platforms, credit cards, and wire, a few types of frauds are easier to be at risk for such business payments.

But you can do is to look out for signs that help you prevent frauds proactively from negatively affecting the business.

You can also adopt other security options as shown below:

• Vitrifying changes
• Web-based email accounts
• Vendor payment locations
• Use two-step authentication for each payment process
• Aware of free requests

And here are 4 precautious security measures that you can take on to protect your company from these payment frauds.

4 Signs that your order went wrong

1. When you have mainly local customers but then you have an international buyer
2. Signs of unusual urgency from the buyer
3. No negotiations allowed over a large number of orders
4. Your buyer tends to go for multiple payment methods to see which one works 

FBI recommendations on BEC scams

• For the payment location of the vendors, please verify any sort of changes relating to that
• Before sending in any money/payments, make sure you confirm any transfer of funds requests
• If the email accounts come from web-based, free accounts, be aware of their requests since they have a higher chance of being hacked than the highly secured corporate emails. And B2B payments SHOULD be discussed over a corporate email that has high security
• Establish an intrusion detection system rules: to avoid emails with extensions that share similarity with company email but not entirely the same i.e. the use of “.co” instead of “.com”
• Register an internet domain that is a tad bit different from your actual company domain to lower the chance of third parties impersonating the company. 
• Be aware of social media postings: do not include sensitive content such as personal details or financial information on your company websites or social media channels
• If you are doing wire transfer payments, make sure you include at least a 2-step verification process in your financial security procedures
• Pay attention to the changes made to your clients’ habits, including the number of payments, reason, details, and etc.