Ecommerce
Keeping it simple
For decades now, the goal of online payments has been a frictionless experience. Every extra mouse click or keystroke carries the potential for the customer to decide that the purchase isn’t worth the effort, so merchants have to walk the line between security and giving their customers a smooth checkout experience. Here, Anant Patel, president of international markets at ConnexPay discusses unified payments platforms and the future of B2B payments.
B
eneath the surface of every payment, a half-dozen or more separate entities, possibly in entirely different countries,
are exchanging data in a complex process. Each of these entities may add time to when the merchant receives their funds and nearly all subtract a sliver of profit from the sale. With cross-border payments, this process becomes even more convoluted. With business to business (B2B) payments,
both sides – the pay in and the pay out – require multiple steps and even dedicated staff or sometimes entire departments to the sending, receiving, and paying of invoices. Automation has meant that most, but not all, companies will be carrying out this process in a smarter way than mailing cheques to their suppliers, but it is still a time-consuming process – especially when eCommerce payments can be made seemingly instantly and outside of work. However, it is possible to easily and quickly send peer-to-peer payments with a few button presses. When you understand the how and why of the payments
process, you can begin to see why it can take 15, 30, even 60 days for B2B payments to arrive, and why a customer can pay a merchant instantly but that merchant can take five working days to refund a customer. You’ll also see that it doesn’t have to be this way – there are simpler, easier, and more profitable ways to carry out payments.
22 | March 2023
How payments work today When anyone from a customer to another business makes an online payment, that payment will typically route through the following steps: a customer selects a payment method, they enter their details into a payment gateway (or their saved payment details are entered for them), their payment details are encrypted and sent to the payment processor (also called an acquirer), the payment processor authorises the payment and sends it to the customer’s bank (or card issuer, digital wallet, etc.), the customer’s bank checks that the funds are available and, if they are, sends funds
to the merchant’s bank. Te payment processor will add fees during this process according to a usually very complicated set of criteria. Despite all of this, funds are typically available to the merchant within 3-5 business days. In B2B payments the story is much more complicated, and
payments take significantly longer – anywhere from 30 to 90 days. Te process of transferring funds from one party to another isn’t fundamentally different from what is described above – wire transfers typically take around 24 hours, for example. What adds time is the administration required on either side of the process. A huge number of B2B transactions are still paper based, with invoices printed, mailed, input manually and then filed. Tese payments will obviously take time to create, send and process, but more modern digital payments will still need invoices to be produced, even if they are
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