Buyers get to have their Cake and Eat it too!

When you talk to most businesses about accepting credit cards as a form of payment for B2B you can almost see the blood run from their faces as they get weak at the knees. It is a tough subject not for the meek in the Merchant sales profession. But why is that? Does it have to be this way?

It is fair to say that Buyers have taken advantage of a system that is froth with rewards of every kind such as cash back, airline points, hotel stays etc. These perks put the buyer in sort of a frenzy as to where they can maximize their return on spend. I do not blame them, hell I am guilty of it myself. First a buyer will usually negotiate a sweet deal with a supplier. This can include a generous term, which the buyer will stretch to the limits and then show up to settle their debt on the exact day to maximize the due date with their Issuer. For all this, they can be the beneficiary of a ton of perks on the back end that include in some cases 2% cash back, an airline point for every dollar spent in the favorite frequent flyer program or night after night of free hotel stays for their next vacation. Seems to me the ball is firmly in the buyer’s court.

Simply put this equation is out of balance. Unlike with SMB’s, The Large Corporate market is dominated by banks and those with the deepest pockets giving rebates to buyers. When once the name of the game was Travel & Entertainment (T & E) spend, has quickly evolved into a race for vendor payable spend. Here a buyer can monetize to the max, what they were going to pay for anyway. .35bp of $100M in payables is a nice $350,000 in the pocket, if you can get a merchant to play the game. Fewer, and fewer supplier want to play this game under the old conditions that just do not work for them. As you stand back and examine the scenario, there is nothing of value for the accepting merchant. They hold the risk, until paid, they financed the debt and they swallow the entire cost of the credit card transaction. Only those with massive margins or in non-competitive industries could be happy with this. Now that is a shrinking prospect list.