By Roger McNamara
A few weeks ago, I received a note from a merchant level salesperson (MLS) who had taken B2B merchant sales training to help him become a better payments consultant for his merchant clients and prospects. This individual had a B2B supplier in his portfolio before the training, but he felt something was missing. It seemed the supplier was not producing the amount of volume on their merchant account that was appropriate for the size of the business.
The MLS got the impression that card payments were an afterthought for the supplier, who would selectively accept card payments from one buyer but not another. Also, at this supplier, buyers were met with resistance when they tried to pay with a card because there was just that undercurrent from the supplier that card payments were too expensive for them to offer.
In reality, this is a common theme among B2B suppliers that have merchant accounts. They believe they have less expensive payment alternatives available to them for collecting outstanding receivables, specifically, check, ACH and wire.
So, where did this thought process begin? If we really want an answer to that question, we have to look back to the early 1990s. At the time, issuers were developing a corporate purchasing card product. It was and still is a tool used by many businesses in various forms to pay for goods and services procured in the course of running a business.
Today this market is valued at about $33 trillion of spend and growing. Businesses try to buy everything they can on these products because the value proposition given to them by the issuers is, well, just too good for them to refuse. The driving factor for the buyer is in the form of rebates that can be quite sizable for usage.
However, for the spend on these cards to flow, a robust supplier acceptance network must exist. Unlike their close cousins in B2C, the B2B network still lacks openness and willingness to accept cards primarily due to a negative pricing perception. Additionally, it is because the payments industry's feet on the street don’t realize they have a real value proposition to share with suppliers other than a cost comparison.
You see, back when it all started, the suppliers and buyers were already doing business with one another. They had established relationships through which buyers bought and paid for goods on a regular basis. Then cards were introduced that could be substituted to settle receivables, when until then, transactions had been done primarily with checks and their perceived low cost.
So where was the value for the supplier? In many cases, what the supplier was hearing from payments industry reps was, “If you do not accept this card, the buyer will purchase elsewhere.” Not the greatest of value propositions.
Over time, suppliers built up a resistance to credit not only due to cost, but also because they had never been shown the value that credit acceptance can bring to a supplier. ISOs and MLSs did not ask them: Will you settle an invoice quicker with a check? Will you settle an invoice faster with ACH? Will you even settle an invoice faster with wire? The answer is no in every case. They also failed to point out that credit card acceptance offers different value than check, ACH and wire payments.
As an MLS, you have to be able to articulate what the value is to a supplier. In essence, you can sell them money to collect their receivable more cheaply than they can by borrowing money or by using their own money to do the same. The value of credit acceptance in B2B is off the charts in comparison to the other payment methods available.
One reason cards are only 8 percent of transactions in B2B is we have not spent time as an industry educating ISOs and MLSs. Too much has been left upon the individual sellers to learn for themselves, with scant resources to educate them. As a result, many have resorted to applying the methodologies they have learned in B2C. Using these tactics in B2B only serves to waste the most precious commodity the merchant seller possesses: time.
B2B selling is a great opportunity. The digitization revolution is well underway in businesses across the country. Business owners are looking to learn from those who can assist them in getting their money faster and more efficiently, with the added benefits built into some products, like Level III data submission. This type of business, however, will not be sold by credit card people; it will be sold by payments consultants who will do the work to learn how their prospective clients are getting paid today and then recommend a better solution to them for tomorrow.
The MLS/payments consultant who wrote me the note after undergoing B2B training said he visited his existing supplier account afterward, shared what he had learned, communicated the value the supplier should be extracting from credit acceptance, and explained how to use card acceptance as a collection tool rather than chalk it up to overhead.
I was thrilled to learn the first transaction that came through after this visit was for more than $85,000, something the MLS had never seen before.
Why? Because his supplier was now convinced credit was not a cost threat to their business; it was the collection tool the MLS had explained to him clearly during their meeting. The icing on the cake was several new B2B leads that came to the MLS as a result of this process. But that is another story for another time. In the meantime, obliterate limits—jump into B2B.
Roger McNamara, president, Guide2Interchange LLC, is a 25+-year veteran of the payments industry, most recently as the director of business development with American Express in the United States. He has sold more than $200 billion worth of card processing and now leads a B2B merchant sales training organization. Contact him at Guide2Interchange@gmail.com or 561-379-3151
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