Using Credit Cards For Business-To-Business Purchases

The use of credit cards in making
business-to-business payments is becoming more prevalent. The process
and costs of using this method of payment was explained during an NACM
teleconference August 16. Lora Wettengel, Assistant Vice President,
Fifth Third Bank, an expert on credit card processing, conducted the
teleconference entitled; “Business-to-Business Processing Overview.”

Wettengel said the U.S. credit card market is
dominated by Visa and Mastercard. Those companies control a combined
89.5 percent of all the cards issued; and by volume in dollars, control
about 83 percent. She noted that payments made by debit and credit card
purchases are growing at the expense of payments made by cash or check.
In 1998, 19 percent of payments were made by credit cards, but by 2004
that percentage grew to 29 percent. She said there is a tremendous
opportunity for businesses to approve business-to-business payment
efficiencies through the use of credit or purchase cards. “More and
more companies are recognizing the benefit of using credit cards as
opposed to check or a wire transfer. When cards are being used, it
eliminates the need for a purchase order.”

For buyers, Wettengel pointed to several advantages
of using credit cards for purchases. Among them, she said they
streamline purchasing power, eliminate paperwork, reduce costs and
offer customized reporting of purchases. For sellers, the advantages of
utilizing credit cards for sales included increased volume sales,
improved cash flow, less paperwork to process, reduced costs, increased
productivity and improved customer service.

For sellers, the more information included in
credit card purchases, the lower the interchange rate or processing fee
will be. Wettengel explained how companies that accept credit card
payments could provide more detailed purchase information with credit
card transactions in order to save thousands of dollars in interchange

For information on future NACM teleconference
subjects, go to NACM’s website at and put your cursor over
the "education" circle at the top of the page.
    Source: NACM and Lora Wettengel

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