Does anyone know or understand how credit card fees are assesed to B2B merchants?

Credit card fees can range anywhere from 2% to just upwards of 3%; the different card vendors apply different rates which also vary depending on whether various other information is received with the card authorization (address, security code, etc.)

If you are doing high-value transactions this adds up quickly! The same payment done via wire will cost you in the neighborhood of $20, is free if done via ACH, and virtually free if done via check.

There is also the inconvenience of a 2-4 day clearing period before the money is remitted to your bank account.

That being said, most businesses accommodate a paying customer. It's just wise to present the alternative payment options first.

Can you clarify...do some vendors want you to pay them by p-card, or are some customers wanting to pay you by p-card?

It all depends on the process you establish to process the payment. Can you provide more details? Do you have a merchant id, acquiring bank and processing capabilities? Or, are you going to be using a third party?

You can negotiate fees for credit card acceptance with your merchant bank. As a part of that process, based on your transaction size, you should register for the "large ticket" program offered by both Visa and MasterCard. This will reduce your processing charges by decreasing the percentage of sale charge for interchange and substituting a flat fee.

If accepting a P-Card gets you paid earlier, you may benefit from accepting the card, with the associated fees, in exchange for quicker payment. The part that you need to be careful about, is accepting a P card on extended terms. Companies use the P-Card to manage their own working capital so should be willing to split that benefit with you by paying you at least 30 days sooner.

Most likely, your customers want to pay by credit card in order to earn reward points or cash rebates that can be worth as much as 1%. Furthermore, your customers are not likely to pay you any quicker than your payment terms, so you will pay roughly 3% so they can earn 1% or less. Credit card issuers are pushing these programs as a means for payers to cut costs.

If accepting payment by credit card will increase your sales, then you can do the math to see if it’s worthwhile; otherwise, you should resist accepting credit card payments or charge a convenience fee, unless there are mitigating circumstances – e.g., payment is to be made at or near time of shipment, which gets you paid quicker & eliminates credit risk or in situations where you feel the customer may not be able to pay otherwise. I have found the convenience fee to be a deterrent to payers looking to earn reward points or rebates.

Like Stacy said: negotiate. Avoid vanilla offers as the fees can get very high. Checking with Visa and MC are good starts; another vendor I know of is BluePay which can be found here: http://www.bluepay.com/rates. I have (in the long past) been able to get rates sub 2% when the quote was for 3.5%...so this is *negotiable*.

Fee Fighters (http://feefighters.com/) claims to do the research for you (and they probably get their fee from the winners). I've not used them, so if you try this I'd be interested in your experience.

James has a point that I'd like to restate: if you are not going to save money (ie lay off an AR person you won't need anymore), charge a fee. This is not dissimilar from wire transfers; if I owe you $100, wire you $100 with a "charges theirs" instruction, you will get $80. That is not payment in full and should not be treated as such.

War story: I did a deliberate 1-off of this flavor: we were small software company, they were large, and it was our first transaction and we wanted to get in the door. It got us around the entire license negotiation process and AR/AP process, so accelerated cash by at least 90 days, reduced risk, and accommodated the customer (who subsequently increased their order by 10x). It wound up costing us 4.5% net through paypal. We made it clear, however, that subsequent charges would get billed back. As you might suppose, they paid by wire on the 10x order.

Typical card processing fees for Purchasing cards can range from 2.5% to 3.5%. If you demand pass-through pricing and can send Level 3 data for purchasing cards, you can reduce the processing cost down to sub-2.0%. Feel free to reach out if you need more information. Here's an article we wrote last on finding the best processor for your needs - http://www.optimizedpmts.com/blog/index.php/finding-the-best-acquirer/

best,
Anand