Digitalising your payments

It is important to note that there are some differences between B2B and B2C ordering, mainly that payment is required instantly with B2C, and these businesses have more margin for higher payment fees.

Many B2B businesses don’t offer card payments, where fees typically range from 1.5% to 2.8%. Other options such as GoCardless and Pay by Bank (Xero Invoice) are credible alternatives, and are frequently used by businesses.

1Card payments

Card payments tend to work if transaction values are lower and if your business is higher margin. Unfortunately, commercial cards do not have regulated interchange caps, meaning Mastercard, Visa and Amex have increased fees. Compare this to consumer cards, where there is a cap on what can be charged per transaction.

However, card payments are convenient and give buyers an option to manage their cash flow using a credit card. Not to mention the card points a buyer can accrue.

In terms of offering card payments, you can easily implement this via payment platforms such as Stripe or Airwallex. Implementation is straightforward with no technical experience required, and can be embedded in your existing invoicing solution (e.g. Xero).

2Direct Debit

Besides requiring payment on invoice, BACS Direct Debit is the best method to reduce late payments.

Typically businesses use GoCardless or Stripe, where payment fees are 1–1.5%. Some buyers push back on Direct Debit, as they want to decide when payments leave their account.

The main benefit of Direct Debit is that you can automatically collect a variable amount without the buyer having to approve each payment. They authorise the mandate once, and you collect what is due.

Larger companies (turnover £1m+) can apply via their bank for a Service User Number (SUN) to file Direct Debit reports and run the process themselves. However, most companies process Direct Debit payments through a third party such as GoCardless.

3Open Banking

Open Banking already offers businesses a lower cost alternative to card payments and Direct Debit. With Xero, you can set Pay by Bank as a payment option where the payment cost is only 0.5%. Stripe offers Pay by Bank as well, for the same fee.

You’ve probably already paid a bill using a bank connection, most likely for a utility or similar service. Whilst digital, there is still a limitation: the buyer needs to initiate or authorise each payment, unlike Direct Debit.

However, the UK Government and the FCA are in the process of introducing commercial Variable Recurring Payments (cVRP): the ability for businesses to take repeat payments via Open Banking. This is similar to BACS Direct Debit, where the buyer provides authorisation once.

The FCA is forecasting variable Open Banking payments to be live in the first half of 2027. You should consider offering this payment option to business buyers, where they only need to authorise once to allow for repeat payments. Costs are expected to be lower than Direct Debit.

At a glance