In a B2B environment, there’s business value in making payments via card. Jon Edelstein, Finexio’s Head of Product, introduces those benefits in our first installment of Finexio’s whiteboard video series.
We’re here today to talk about the benefits of card payments in a B2B environment. Here at Finexio, we are huge proponents of payments by card and there are some very specific reasons why we feel that cards are really an indispensable part of making B2B payments today. The first reason is that card payments require no exchange of banking information between the parties. So if you think for a moment, when one goes to Best Buy to buy a television, I don’t need to know Best Buy’s banking information. And Best Buy doesn’t need to know my banking information. I simply present them this piece of plastic, which they swipe or insert into a machine and they instantly know, if I have the money to buy the television, for example. And if I do, I’m walking out of that store moments thereafter with that television in hand. Contrast that with the ACH for example, where I would probably have to fill out some kind of form, authorizing them to withdraw the funds from my account and probably have to go away for five days, so they could make sure that the funds were in my account. So, when you deal with a card-based payment there’s a lot to be said of the fact that I can send a payment to another party, while not having to know a great deal about them for them to actually collect those funds.
Second, funds are guaranteed and settle faster than other available payment types. So, when Best Buy swiped that card and got that authorization to make that sale, that authorization is a guarantee that the funds are to be transferred to them. And those funds settle, typically overnight. Contrast that with a large dollar check, which can take several days to clear at your commercial bank. So, the speed of settlement and the fact that those funds are guaranteed, is often a big incentive for companies that want to get access to their cash faster to accept the card-based payment.
Finally, one of the things that we really like about cards, is the superior technology involved. Contrast that for example with the ACH payments, where the process of reconciliation and settlement…the information around that is often what we call assumptive. The system doesn’t actually let you know, in no uncertain terms, whether or not the recipient of the funds actually got the money. There’s nothing that could get back to you and say, “Yep, they have it, and here’s your confirmation code.” You just assume that they got the money, otherwise if they didn’t, they complain, and you call the bank and try to find out what happened. In the case of a card payment, it’s very rich from a data perspective. Every step along the way, every event is logged somewhere and that’s information that can be used for reconciliation purposes and it’s also information that is very, very useful in ensuring and confirming that payments have been settled. So, there’s always that positive confirmation of settlement on the recipient side.
One of the big reasons that we favor cards overall, is the fact that technologically it’s a very modern platform and there are a lot of tools there from a dispute and resolution perspective.