Cost-Effective Payment Methods: Where Finance Leaders Get Cards Wrong

Every finance professional has a natural inclination to keep an eye on business costs, but there’s one area where that instinct is steering organizations in the wrong direction:

Limiting your buyers’ payment options as a means to cut costs

The situation starts with credit cards and virtual cards. Suppliers have embraced these digital payment methods to give customers their preferred payment option, but there’s a catch. Expanding B2B payment policies can carry affiliated costs. Most notably, card processing fees (including interchange rate, network fees, and acquiring fees) can take a bite of the budget. With B2B profit margins around 10%, typical credit card processing fees of 1.5-3.5% can erode profits by as much as 15-35%.

As a result, many CFOs are second guessing their card acceptance policies, questioning whether a superior buyer experience is worth the higher price. But there’s substantial evidence to show that removing card privileges isn’t a smart move:

• Alienating most of the market: Middle market firms in North America increased virtual card usage by 54% in 2024. More broadly, the use of these cards has increased by 33% year over year. Abandoning this group could mean losing some important clients to your competitors. After all, virtual card buyers tend to be large companies.  

• More unpaid invoices: With inflation rising and economic headwinds at play, many buyers prefer cards today. By limiting this payment option, suppliers remove the ability for buyers to pay on credit, weakening their cash flow, and risking the timeliness of payment. 

• Security is at stake: With checks prone to fraud and ACH slowing cash flow, pushing buyers to traditional payment methods can open unnecessary financial risk. 

• Losing your pricing power: With many credit and virtual card programs coming with cash reward and rebate programs, buyers now factor these discounts into the total cost of doing business. If access to these rebates is removed, it implicitly increases the cost of the goods or services they are looking to purchase. 

“CFOs must ask themselves: Do the benefits outweigh the card fees? Are these financial costs worth it?“

Kunal Patel, SVP Payments, Billtrust

This is where cost-cutting efforts can get in the way of sound financial decision-making affecting ready-to-flow revenue streams.

Abandoning Your Card Payment Methods: Data-Driven Advice

While every business is different, Billtrust’s payment experts consistently find that suppliers should keep all payment channels open at the macro-level and then layer bespoke payment policies across each customer segment. This way, companies can meet their buyers where they are, giving them access to payment methods when they occur within the company’s pre-defined accepted payments policy. Learn what your payment policy says about your customer experience.

Our advice is founded in data.

Billtrust has completed more than 6,000 digital finance transformations, consulting AR leaders on strategies to reduce their payment acceptance costs and implement smart surcharging programs. Plus, in processing billions of invoices annually, we continually observe how companies transact with buyers of all sizes and types.

Unintended Consequences

Billtrust has witnessed cases where our clients have removed their card acceptance policies to reduce AR-related expenses. Here were the unintended consequences of forcing buyers to switch to ACH, for example:

• Less working capital: Payments took a longer time to hit the bank account, as the buyers did not have the funds on hand.
• Less competitive pricing: Buyers expected a similar card reward structure to be funded by the supplier for ACH transactions.
• A productivity killer: The remittance information came in separately, or not at all, from the payment, making cash application tasks more difficult for AR staff. This affected collections efforts too as AR team members needed to shift to the new overabundance of exceptions and reconciliation work.

Best Practices for Managing Acceptance Costs

Keeping cards is your best bet, but that doesn’t mean rolling over and accepting all the costs that come with them. Finance leaders should consider these tools to manage card acceptance costs:

1. Control which buyers can use cards, so only select customer groups, like higher margin accounts, are allowed to use your more expensive payment modalities
2. Focus on your payment data quality to achieve Level 3 interchange rates, the lowest processing fees
3. Manage discounts when your buyers pay with a card to offset costs
4. Exercise grace periods that allow buyers the freedom to pay using cards, as long as the payment is received by a specific deadline; otherwise, they can only pay with ACH
5. Consider dynamic pricing and discounting practices — yes, these control strategies can be used with card payments

The Case for Keeping Cards

Why buyers love cards: B2B companies can rest assured that their outstanding bills are paid. Plus, they get rebates, credits, or points that can be traded in as cash or are considered cash equivalents. Using credit allows buyers to keep more cash on hand, strengthening their financial positions through cash reserves. Virtual cards specifically allow for more security and control as they are preauthorized for specific amounts and have the ability to be instantly blocked or frozen should a security incident occur.

Suppliers get something too: Merchants like cards too because, compared to ACH, they can get paid faster, accelerating cash inflows. Plus, there is the potential for buyers to buy more, meaning cards can be a way to open wider revenue streams.

You’re Thinking about Cards All Wrong

“Many finance leaders are thinking about cards as a cost instead of a cash facilitator. For both buyers and suppliers, cards are a lever to manage working capital. Therefore, they should be classified less as a payment channel and more as a financial protection tool.”

Kunal Patel, SVP Payments, Billtrust

Making Card Payment Methods Cost Effective: How Billtrust Can Help

Handling card payments can be a drag on the budget and AR team efficiency — not to mention a security and compliance risk. Billtrust offers a Payment solution that makes it easy to facilitate all the ins and outs of card payments. Here are few reasons why our clients love it:

• Multiple payment modalities: Expand your payment options with credit cards, virtual cards, ACH, SEPA Direct Debit, and other international payment modalities
• Automated payment processing: Your branded invoicing and payment portal makes it easy to process payments automatically and reconcile them using cash application tools
• Customized payment policies: Configurable rules allow you to customize payment methods by customer segments for more granular financial control
• Digital Lockbox is built in: The solution includes a fully automated and PCI-compliant acceptance solution for emailed virtual cards
• Payment visibility on AP portals: Integration with more than 260+ client AP portals mean you’ll know when payments come through outside systems
• Cost-optimization programs: Surcharge your buyers with expert guidance to help recoup card payment fees and optimize your interchange rates, maximizing savings on Level 2 and Level 3 transactions
• Proactive card management: Get in front of card denials before your invoices go unpaid – you can proactively manage expirations and see when purchase orders run out of funds
• Straight-through processing: All transactions occurring within the Billtrust Payments platform provide clean remittance matching for smoother cash application processes

Read the brochure to learn more