B2B Marketplace: the payment process as a lever for improving dispute management

18 October 2023

Business Insight

Increasingly popular with buyers keen to find new partners and sellers eager to reduce their processing costs, B2B marketplaces are not immune to disputes. To avoid disputes that could damage the marketplace’s reputation and could result in lost sales, it’s best to anticipate incidents by implementing proven practices and innovative solutions that improve dispute management. Find out more!

Dispute management: what’s at stake for B2B marketplaces?

B2B marketplaces causes for disputes

On B2B marketplaces, disputes can be caused by:

  • Product quality: buyers may be disappointed by the quality of the products they receive, particularly if the products do not correspond to the available specifications or are defective. It leads to requests for refunds, returns, or replacements.
  • Delivery: announcing a delivery date that is not met can lead to dissatisfaction and inconvenience for B2B buyers, especially in sectors such as construction or manufacturing, mainly dependent on raw materials. Sometimes, these buyers turn against the sellers and demand compensation for the extra costs caused by the delay.
  • Price differences: when the prices invoiced are not identical to those agreed or displayed on the marketplace, the buyer can quickly feel cheated, even if this results from an error.
  • Non-compliance with standards or regulations: some business sectors have specific requirements for compliance with standards or regulations. A vendor failing to meet these requirements can lead to disputes and requests for resolution.
  • Liability: in certain situations, disputes can arise when responsibility for injury, financial loss, or other damage is disputed between the buyer, the seller, and the marketplace itself.

Disputes: what are the issues with payment processes?

B2B marketplaces have their unique characteristics that can give rise to disputes. On these marketplaces for professionals, the volume of orders is often significant, and the amounts can be (very) high.

The problem often encountered by B2B marketplaces is that the payer disputes the card transaction by chargeback instead of contacting the marketplace’s customer service department to resolve the dispute. Used in cases where goods have not been received or are faulty, chargebacks for commercial reasons can lead to unpaid invoices and extra costs for the marketplace.

Litigation: what impact on financial flows?

When disputes lead to a refund, this has an impact on the B2B marketplace’s financial flows, depending on the payment method used by the buyer:

  • By credit card, refunds can be made up to 365 days after the date of sale. After this deadline, a bank transfer can be made, with supporting documents (bank statement) on the buyer’s side.
  • By direct debit, repayment is risky, especially if it’s a standard SEPA direct debit mandate (Core). In this case, the debtors can contest the direct debit simultaneously: they have 13 months (subject to conditions) after the debit date to reject the payment. In the case of a B2B mandate, reimbursement is possible by bank transfer 5 working days after receipt of the funds by the merchant (no further rejection possible on the debtor’s side), provided that the account reimbursed corresponds to the account of the buyer charged.
  • By cheque, reimbursement can be made by bank transfer after 60 days, a period necessary to ensure that the payment cheque sent by the buyer has not been stopped.

Improving dispute management with the payment process

Depending on the sector of activity and the buyer profile, each B2B marketplace can define its own dispute resolution policies and procedures. Mediation, arbitration, or customer service mechanisms to help resolve disputes efficiently and fairly… Many solutions exist!

Best practices to put in place

Secure deliveries to avoid major delays and product errors, opt for a responsive after-sales service, or be vigilant regarding your merchants: it’s always better to anticipate situations to reduce the number of disputes upstream.

To improve the experience of buyers and sellers, improving the refund process is vital. How can this be done? By, for example, blocking funds before they are paid out to sellers to ensure that the buyer has received the order and that it conforms to expectations.

Setting up B2B direct debits instead of Core mandates may also be worthwhile to avoid debtor-initiated rejections.

An efficient payment process

A well-structured, transparent, and secure payment process is essential in improving disputes on B2B marketplaces. As well as reducing the risk of incidents, it builds trust, makes it easier to resolve problems and fosters healthy, lasting commercial relationships. There are 3 key points to consider when defining an effective payment process:

  • Transparency: a well-defined and transparent payment process helps to reduce disputes by providing clear traceability of transactions. Dates, amounts, references… All important information must be detailed and easily accessible so that it can be used to resolve problems. Automated notifications of payment status, confirmation of receipt of funds, and transaction details can help prevent potential misunderstandings.
  • Payment security: by using secure and reliable payment methods, B2B marketplaces can reinforce trust between the parties involved. Security protocols and the use of recognised and certified payment gateways reduce the risk of fraud and disputes.
  • Dispute resolution mechanisms: implementing dispute resolution mechanisms as an integral part of the payment process enables payment-related problems to be dealt with quickly while reducing the time and costs associated with disputes. This can take the form of structured dispute resolution steps, such as mediation or arbitration, to help parties reach an agreement.

To help you manage disputes and perfect the buying/selling process, opt out for Lemonway, a certified payment service provider that supports numerous B2B marketplaces with its innovative, agile payment solution. Contact our experts to find out more about our solution!