B2B marketplaces simplify the buying and selling process by centralizing product listings, payment processing, and order management.
Having a clear view on how payment processes work in B2B Marketplaces can help you to have smooth and efficient transactions, reducing the risk of payment delays or disputes. Different B2B Marketplaces have varying preferences and requirements when it comes to payments; a well understanding of your target customers and marketplace is the key to pick the most suitable payment options.
To help you assess your needs and be informed about payment options that you can offer in your B2B Marketplace; we have created the beginners’ guide for B2B marketplace payments. This is part 1 of our series, where we cover the basics of a payment operation.
Intro to B2B Marketplace Payments
As a B2B Marketplace, you are responsible of facilitating financial transactions between multiple sellers and buyers through your online platform.
Handling payments between sellers and buyers is a highly important operational function for B2B Marketplaces. Before we deep-dive into details of payment systems, let’s look at how the payment process typically works on a B2B Marketplace:
- Selection and Order Placement: Sellers list their products or services on the B2B Marketplace, specifying the prices and any other relevant details. Buyers search the B2B Marketplace for the products or services they need and select the ones that meet their requirements. Once the buyers decide on the products or services, they place an order through the B2B Marketplace. The order details are sent to the seller, initiating the transaction process.
- Payment Selection: The B2B marketplace offers various payment options (e.g., credit cards, bank transfers), and buyers choose their preferred method to make the payment.
- Secure Payment Processing and Authorization: The payment system provider securely captures and encrypts the buyer's payment information from the issuing bank, then forwards it to the acquiring bank for authorization. Once approved, funds are transferred from the buyer's account to the seller's account for settlement.
- Invoice Generation: The seller generates an invoice based on the order details, including the agreed-upon prices, quantity, and any applicable taxes or fees. This invoice provides a clear breakdown of the transaction for both parties.
- Confirmation and Order Fulfillment: Both the buyer and the seller receive notifications confirming the transaction. The seller proceeds to fulfill the order by shipping the products or providing the services.
What happens after the payment process is completed?
In the case of physical products, the B2B marketplace may provide shipment tracking information to both the buyer and seller for transparency and accountability. Once the buyer receives the products or services and is satisfied with the transaction, the order is considered complete.
Depending on the marketplace's payout schedule, the seller's account is credited with the payment amount after deducting any applicable fees. In case of any disputes or issues with the transaction, the B2B marketplace may step in to mediate or provide a resolution framework for both parties.
This is it for part 1. In our next section we are going to cover payments requirements and how to actually asses which payment methods are relevant.