Choosing a reliable third-party processor is crucial, and in this guide, we'll break down what to look out for and how to choose a third-party payment processor that fits your needs.
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If your business sells to other businesses in the UK, then you might be familiar with the world of third-party payment processors. Relying on other entities for payment, whether it be an individual or a faceless entity, can be painful. Invoices can get buried, bank transfers stall, terms drag, cash flow suffers, and you can get stuck on the phone for hours trying to piece together what the exact status of your funds is.
Choosing a reliable third-party processor is crucial, and in this guide, we'll break down what to look out for and how to choose a third-party payment processor that fits your needs.
A third-party payment processor helps you bypass the back-and-forth by handling payments on your behalf. Selling to multiple businesses can be complicated, particularly if you are in an industry that deals with multiple different clients with different administrative procedures and payment systems. Some providers also support B2B Buy Now Pay Later to help your clients spread costs without slowing down your cash flow. A third-party payment processor helps standardise payments and takes on the risk of collecting payments from the client or buyer.
Third-party payment processors will typically come with the following:
This makes payment processing cleaner, faster, and negates awkward conversations with clients.
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For B2B companies in the UK, they need to pay attention to both UK and EU regulations. As they will need to comply with both of them in many cases, it's better to be safe than sorry. GDPR. FCA. PSD2. AML and other 3-letter acronyms can cause anxiety for those wishing to comply in the UK. A solid third-party processor will handle these for you, but it’s still worth knowing what to look for. At the very least, they should be PCI DSS compliant, meaning they’re equipped to securely handle and store cardholder data. They should also support 3D Secure and Strong Customer Authentication (SCA), both of which are now required under PSD2 to help reduce fraud and verify transactions.
Anti-money laundering compliance is also important, and a good provider will have built-in AML policies so a business never has to worry about this facet of compliance. If the business or service provider engages in anything that can be deemed "financial services", then they'll need to make sure they comply with the Financial Conduct Authority (FCA), and a good third-party payment processor will be well aware of those rules. For additional guidance, you can consult an industry-recognised third-party payment processors association or trade body that maintains regulatory standards.
Third-party payment processors will advertise simple rates, but in reality, it's far from simple when looking at the fine print. Many third-party providers will have the following fees.
A few of these fees, like chargebacks, don't happen that often, and some, like the platform fees, are extremely variable. If your clients are overseas, cross-border B2B payments may come with extra FX fees, often hidden in the markup. In many cases, the fees will hover around 5%, and on a 1,000 GBP transaction, if you were to take the average of all typical fees, that would look like this.
These types of charges eat into profit margins, so it's important to be well aware of all the fees you might be up against and what the industry standards are when reviewing third party payment processing options.
When dealing with technology and ecommerce payment processing, most people prefer the "as easy to use as possible" option, and for businesses that move product with Shopify and ERP systems, making sure the integration with those platforms is as simple as possible is imperative.
For e-commerce sellers using Shopify, the ideal third-party payment processor should offer a native integration that automates the entire payment workflow. This should include things like syncing orders and invoices in real time, feeding buyer data into your processor dashboard, and triggering payment reminders based on order status. The point of these automations is to reduce the manual input and to make reconciliation more straightforward, which is especially important when dealing with high order volume.
If your business operates on B2B terms, such as net 30 or net 60 payment schedules, the integration must support these timelines. Not all Shopify-compatible processors are built with B2B in mind, so confirm whether your provider can handle structured payment terms without requiring custom workarounds.
Businesses that are using enterprise resource planning systems, like NetSuite, SAP, or QuickBooks, are going to want as much integration as possible with their third-party payment processors. Your payment processor should be able to sync invoices, payments, and customer records directly with your ERP to maintain accounting accuracy and streamline financial operations. Real-time reporting on payment status helps your finance team stay ahead of receivables and reduce outstanding balances. Strong integrations should also help automate payment reconciliation so your accounting stays clean.
Advanced features like automatic reconciliation, purchase order matching, and VAT support can help save on admin procedures and can be especially valuable when dealing with bulk or cross-border transactions.
You might be aware that third-party processors aren't the only game in town for B2B payments; merchant accounts are another option for financial transactions. Merchant accounts are specialised bank accounts that allow businesses to accept and process credit and debit card payments directly through a payment gateway, and are available at most major banks. Below are the key differences between merchant accounts and third-party processors.
So the pros for a merchant account are many of the pros you get when you deal with big financial institutions: lower fees, more control, and flexibility for complex setups. But the trade-off is longer onboarding, less support, and more responsibility when something goes wrong (like a chargeback). Third-party processors, on the other hand, are fast to set up, easy to integrate, and handle most of the messy back-end for you, including disputes. The downside is that you’ll usually pay more per transaction, and you may have less control over the fine print.
Fraud in B2B transactions is more common than people might think. In fact, it's on the rise in the UK recently after hovering around 3 million cases a year for the past half decade, recently reaching over 3.1 million cases.
Fake companies, identity theft, and invoice scams can quietly eat into your margins, and sometimes you might not even notice it's happening until too late. Make sure you pay a lot of attention to this element when looking at third-party processors, and look for things like real-time fraud scoring, AI-based pattern recognition, KYC checks for new buyers, instant card validation, and built-in chargeback protection.
This is of particular importance if you're working with complex buyers, large order values, or just general untrustworthiness for whatever reason you might deem actionable. A cleaner and more trusted environment can also mean better approval rates and lower processing fees over time, so it's also an investment in the future!
As a business, your income is your lifeblood, and thus, payment reliability is of incredible importance, especially for businesses that have small margins. This is where payment orchestration and routing come into play. They are effectively a behind-the-scenes way to manipulate and improve approval rates by automatically retrying failed payments or routing them through alternate providers. Here is what to look for:
If a payment fails, smart systems can automatically retry at a better time. For example, if a card is declined on Monday, it might try again Friday after payday, which improves your chances of getting paid without manual follow-up.
If a bank or payment partner goes down, the system can route the transaction through an alternate provider. This helps keep payments flowing even in cases of a temporary outage or connection issue.
Processors can switch between different payment rails like cards, ACH, Bacs, or SEPA based on what works best. This flexibility is especially useful for cross-border payments or when serving both UK and EU clients.
You'll know instantly whether a payment was approved, declined, or delayed. This makes it easier to manage shipping, customer support, and accounting without waiting for end-of-day reports.
The system can adjust the retry logic depending on where the buyer is located or who they bank with. For example, it might wait until banking hours resume in a client’s local time zone before attempting again.
Not all third-party payment processors are created equal, and thus, it's important you have all the Is dotted and the Ts crossed before you make a selection. When it comes to payment processing, due diligence is incredibly important. Below is a helpful checklist.
A good processor should tick all of these boxes, and if they don't, they better have a good reason why, or have such an upside with another feature, that it doesn't matter as much. Either way, if a provider can't answer these questions to full satisfaction, you should most definitely ask why.
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The absolute best feature for UK sellers using iwocaPay is its built-in BNPL (Buy Now Pay later) solution. Instead of offering trade credit manually and waiting the traditional 30 or 60 days to get paid, iwocaPay lets you offer flexible terms and allows you to get paid instantly. Your buyer pays over time, and iwocaPay takes care of the risk. For sellers, it’s a simple way to offer terms to more customers without tying up cash or worrying about late payments. It keeps the cash flowing and frees up time spent chasing invoices.
