Glossary

162 essential terms in B2B payments and ecommerce. Simple and concise explanations to help you navigate your way in this industry.

A

Abandonment rate

The percentage of users who do not complete a process such as a purchase or registration. It is a measure of the efficiency of the conversion process.

Acceptance rate

The percentage of payments that are successfully processed and accepted compared to the total number of transactions submitted. A higher acceptance rate indicates the efficiency and reliability of the payment system.

Account number

A unique number assigned to a specific bank account. It is used to correctly allocate transactions to this account.

Account payables

The liabilities of a company that it still needs to pay to suppliers or service providers. These arise when goods or services are purchased on account.

Account receivables

The claims of a company against its customers for goods or services delivered but not yet paid for. These represent a significant part of the current assets.

Alternative payment methods

Payment methods beyond traditional methods like bank transfer or credit card. These include digital wallets, cryptocurrencies and Buy Now, Pay Later payment methods.

Annual recurring revenue (ARR)

The total amount a company earns through recurring subscriptions or contracts within a year.

Annual subscription

A payment option where customers pay once a year for a product or service. This promotes customer loyalty and can also lead to a more stable revenue stream.

Anti money laundering (AML)

The measures B2B merchants can take to prevent illegal activities and ensure that their payment processes comply with legal regulations. This includes identity checks and transaction monitoring.

Application programming interface (API)

Enables the seamless integration of different software applications to ensure smooth data exchange between these systems. B2B merchants use APIs to connect their payment platforms with other business applications.

Approved orders

Orders that have been released after review by the company. Approval often occurs after a credit check or availability check of the goods.

Authentication

The process of verifying the identity of a person or system, often through passwords, biometric data, or other security measures. In payment transactions, this ensures that transactions are carried out by authorized persons.

Authorization

Confirmation by a bank or payment provider that a payment is valid and the required amount is available. This is an essential step in transaction processing.

Automated clearing house (ACH)

 An electronic payment network that enables the automated processing of money transfers. It offers a cost-effective and efficient method for B2B payments, especially for recurring transactions.

Automated invoicing / billing

The use of software to automate the billing process. This optimizes efficiency and minimizes human errors in creating and transmitting invoices.

Average order value (AOV)

The average amount of money customers spend per order. Analyzing this value allows B2B merchants to adjust their sales strategies and maximize revenue potential.

B

B2B Buy Now, Pay Later (B2B BNPL)

A payment model where companies buy goods immediately and pay at a later date. This offers flexibility and can improve liquidity.

B2B payments

Transactions between business customers that handle the purchase and sale of goods or services in the business-to-business sector. These transactions can include various payment methods and systems.

Balance sheet

A financial overview of a company’s assets, liabilities, and equity at a specific point in time. It provides insight into the financial health and performance of a B2B merchant.

Bank identification number (BIN)

A sequence of numbers that identifies the bank of a credit or debit cardholder. B2B merchants use the BIN to authenticate payment cards and securely process transactions.

Bank sort Code

A specific number that identifies banks in Germany. It is used to clearly recognize financial institutions within national banking transactions.

Basket / shopping cart

The area in a webshop where customers collect their selected products before purchase. It is an important part of the e-commerce experience.

Business buyer / customer

Companies or organizations that purchase products or services from other companies. B2B merchants tailor their sales strategies and payment options to the needs and requirements of these B2B customers.

Buy Now, Pay Later (BNPL)

A payment solution that allows buyers to acquire products immediately and pay at a later date. This flexible payment option which started out in B2C improves the buying experience and is increasingly being used in the B2B sector.

Buyer identification

A security procedure in which the identity of buyers is verified to prevent fraudulent activities. This process ensures secure payment processing.

Buyer limit

The maximum amount customers can spend on purchases within a certain period. This serves as budget control and allows for responsible use of payment options.

C

Cart abandonment / abandoned cart

The case when customers do not complete the checkout process for various reasons. Merchants analyze purchase abandonment rates to identify potential barriers and optimize conversion.

Cashback

An incentive program where customers receive a part of the purchase amount back. This promotes customer loyalty and can support the repetition of purchases.

Cash on delivery (COD)

A payment option where customers pay the invoice directly upon delivery. B2B merchants offer COD to provide customers with a flexible payment method and strengthen trust in the transaction

Cashflow

The net inflow or outflow of funds in a business. A positive cash flow is crucial for the financial stability and liquidity of a merchant.

Catalog interchange format (CIF)

A standard format for displaying catalog data in e-commerce systems. It enables the exchange of detailed product information between different e-commerce platforms and systems. CIF is often used in B2B environments to ensure the integration and consistency of product catalogs provided by different suppliers.

Chargeback

A transaction where a customer cancels a payment already made. In some cases, the merchant can dispute the chargeback, for example, if it is a case of fraud.

Checkout

The final step in the purchasing process, where customers pay for their selected items and complete the purchase. A smooth checkout is crucial for a positive buying experience.

Collection

A process where payments from customers who have not met their financial obligations are pursued and demanded.

Compound annual growth rate (CAGR)

The average annual growth rate typically calculated over several years. Companies use CAGR for various metrics such as revenue, profit, and dividends.

Consolidated statement

An overview of all relevant financial information of a company. Merchants use consolidated statements to get a holistic view of their financial performance.

Conversion rate (CVR)

The percentage of website visitors who actually become paying customers. The conversion rate is a crucial KPI for marketing and sales strategies, as a high CVR means high sales.

Credit check

The assessment of the creditworthiness of customers. Merchants conduct credit checks to minimize the risk of payment defaults and build trustworthy business relationships.

Credit insurance

Protection against losses that may arise from payment defaults or insolvencies of customers. It provides a safeguard against credit risk.

Credit limit

The maximum amount that customers can purchase on credit. Merchants set credit limits to control financial risk and ensure responsible use of credit options.

Credit risk

The danger that customers may not be able to meet their payment obligations. Merchants analyze and manage credit risk to minimize financial losses, for example, by conducting credit checks.

Creditor

An institution or individual that provides financial resources. A lender, for example, can lend money to merchants to finance their business activities or cover short-term liquidity needs.

Creditworthiness

The assessment of whether a company is capable of meeting its financial obligations. A positive creditworthiness is crucial for obtaining loans and using B2B BNPL payment methods.

Cross-border payments

Financial transactions between business partners from different countries. Cross-border payments require consideration of currency differences and international payment standards.

Customer acquisition cost (CAC)

The total cost incurred by a company to acquire a new customer. A low CAC relative to customer value is desirable.

Customer lifetime-value (CLV)

The estimated total value that a customer generates during their entire business relationship with a company. A higher CLV indicates the profitability of customer relationships.

Customer retention

Describes a company’s ability to retain customers in the long term. Satisfied customers are more likely to do repeat business.

Customer winback

Measures taken to regain former customers. This can be achieved through targeted marketing strategies or improved customer service.

D

Days sales outstanding (DSO)

The average time it takes for a company to receive outstanding receivables from customers. It is an indicator of the efficiency of receivables management.

Debt factoring

The sale of receivables to a financial institution or service provider to obtain immediate liquidity. The company receives immediate payment, while the service provider takes over collection.

Debtor

A person or entity that has a financial obligation to a creditor. In the context of receivables management, it refers to customers who have outstanding payments.

Deferred payment

An arrangement that allows customers to pay the purchase price at a later date. This can increase buying willingness and conserve the liquidity of customers.

Digital trade account

An online account specifically set up for business transactions in e-commerce. It enables the processing of payments and financial transactions in digital commerce.

Digital wallet / e-wallet

An electronic platform that allows users to process payments via mobile devices or online platforms.

Dispute

A disagreement or discrepancy between buyers and sellers regarding a transaction. Dispute management is crucial for resolving conflicts.

Drop-shipping

An e-commerce business model where the retailer does not physically stock products but has them shipped directly from the supplier to the customers. The retailer acts as an intermediary without physical inventory management.

Dunning

All processes aimed at reminding customers about outstanding payments and, if necessary, sending reminders to ensure the settlement of open receivables.

E

E-invoicing / electronic invoicing

Replaces traditional paper invoices with digital formats. It speeds up the invoicing process, reduces errors, and promotes traceability.

Ecommerce

Refers to electronic commerce, where products or services are bought and sold online. This includes both B2B and B2C transactions.

Ecommerce payments

All financial transactions carried out within the scope of e-commerce. This includes payments for products or services over digital platforms.

Electronic data interchange payment (EDI)

The process of electronically transferring payment data between business partners. EDI enables payment transactions to be processed quickly and securely without manual intervention, which increases efficiency and reduces errors. It is often used in B2B payment processes to process invoices, orders and payment receipts.

Electronic fund transfer (EFT)

A method for transferring money between bank accounts using electronic systems. This enables fast and secure transactions.

Electronic Money Institute (EMI)

A financial company that offers digital payment services, including electronic wallets, cards, and transfers.

Embedded finance

The seamless integration of various financial services into non-financial products or services to provide customers with additional value.

Embedded payments

The integration of payment options directly into other products or services to facilitate the payment process for customers.

European banking authority (EBA)

An independent EU authority responsible for monitoring and ensuring the effectiveness of banking supervision in the European Union.

F

Factoring

A financing method where companies sell their receivables to obtain immediate liquidity. This approach can improve companies’ cash flow situations and provide faster access to financial resources.

Financial institution

An organization that offers various financial services, including lending, deposit management, and payment processing. These institutions play a central role in the B2B payment process.

Financing

The provision of funds for companies, whether in the form of equity or debt. This financial support enables B2B merchants to make investments and expand their business activities.

Fintech / financial technology

Refers to financial technologies and innovative technologies used in the financial sector to make financial services more efficient and modern. In the B2B payment environment, fintech solutions contribute to optimizing processes and securing transactions.

Flexible payment terms

These payment terms allow B2B merchants and their customers to adjust payment modalities according to their individual needs. This flexibility promotes a smooth business relationship.

Fraud detection

The use of technologies and processes to identify and prevent fraudulent activities in B2B transactions. This contributes to the safety and integrity of the payment process.

Fraud prevention

Preventive measures to avoid fraud in B2B payments. Implementing secure authentication methods and monitoring systems, merchants can proactively address fraudulent activities.

Fraud risk

The risk that fraudulent actions could compromise the B2B payment process. Identifying and minimizing this risk is crucial for the secure handling of business transactions.

Frictionless checkout / seamless checkout

A process that enables customers to complete payments quickly and efficiently. A seamless checkout is of central importance for B2B merchants to provide their customers with a positive experience.

Fulfillment

All steps from the order placement to delivery. An efficient B2B payment process should be seamlessly integrated into order fulfillment to ensure an effective overall process.

G

General data protection regulation (GDPR)

An EU regulation that governs the protection of personal data. B2B merchants must ensure their payment systems are GDPR compliant to safeguard their customers’ privacy.

Gross merchandise value (GMV)

The total value of all goods sold via a platform or sales channel, excluding discounts or returns. This key figure is relevant for evaluating the success of B2B payment platforms.

I

Insolvency / inability to pay

The condition when a company is no longer able to meet its financial obligations. In the B2B context, this can affect open invoices and payment agreements.

Installments

A payment method that allows customers to pay the total amount for a product in several fixed monthly payments. This offers flexibility and can enhance the appeal of B2B offers.

Instant credit decision

A process where an automated analysis makes an immediate credit decision for a customer. This speeds up the payment process and improves customer retention.

Integration

The seamless integration of payment solutions into existing business systems. Effective integration enables a smooth flow of payment processes in the B2B sector.

International bank account number (IBAN)

A standardized identifier for bank accounts worldwide. In the B2B context, the use of IBAN facilitates international payment processing.

Invoice

A formal payment request for goods delivered or services rendered. In the B2B sector, it serves as the basis for processing payments between companies.

Invoice payment / purchase

A payment method that allows customers to receive products or services and settle the purchase price at a later date. This promotes flexibility and can conserve liquidity.

Import one-stop shop (IOSS)

A central element of the EU VAT reform 2021, which facilitates the handling of VAT payments for cross-border transactions.

K

Know your business (KYB)

The process by which companies verify the identity and business activities of their business partners. KYB refers to building trustworthy relationships with other businesses.

Know your customer (KYC)

The process by which companies verify the identity of their customers to minimize potential risks and meet regulatory requirements. Unlike KYB, KYC focuses on conducting business with individuals.

L

Late payment

The condition where invoices or liabilities are not settled within the agreed terms. This can lead to additional fees or impairments of business relationships.

Lifetime-value (LTV)

A measure of the total value that customers provide throughout their business relationship with a company. LTV helps companies to recognize and maximize the value of long-term customer relationships.

M

Market demand

The quantity of a product or service that buyers demand in a particular market at a given time. A precise understanding of market demand is crucial for B2B businesses.

Marketplace

A platform where various sellers offer their products or services. In the B2B sector, marketplaces provide a central point for business transactions.

Merchant

An individual or company that offers goods or services for resale. They act as intermediaries between manufacturers and end customers.

Merchant of record / registered merchant

A company that has officially registered and obtained the necessary permits to trade specific goods or services.

Mobile commerce / m-commerce

Trading through mobile devices such as smartphones or tablets. In the B2B area, M-Commerce enables flexible and fast access to business offers.

Monthly recurring revenue (MRR)

A metric for the recurring monthly revenue that a company generates through subscription-based models.

Multi-currency accounts

These accounts allow companies to hold accounts in different currencies, thereby facilitating international business transactions.

Multi-currency transactions

Refers to financial transactions carried out in one or more foreign currencies. For internationally oriented companies, multi-currency accounts and systems are essential.

Multichannel sales

The sale of products or services through various distribution channels. In the B2B area, this allows for broader market coverage and expanded business opportunities.

N

Net promoter score (NPS)

Measures customer satisfaction and loyalty. It is based on the simple question: “How likely are you to recommend us?” and provides insight into customer retention in the B2B sector.

Non-payment / payment default

Occurs when a customer fails to meet their financial obligations on time. This can significantly impact the liquidity of a B2B merchant and requires appropriate measures for risk minimization.

O

Off-balance sheet financing (OBSF)

Financing practices where liabilities do not appear on the balance sheet. B2B merchants use OBSF to optimize their balance sheets and reduce certain risks.

Offline transaction

A business transaction that takes place without a direct online connection. In the B2B context, offline transactions can be useful for telesales, email sales, field sales, or sales at trade shows.

Omnichannel sales

The seamless integration of various sales channels to provide a consistent shopping experience. B2B merchants implement omnichannel strategies to offer their customers flexible and diverse purchasing options.

Open banking

A banking practice where financial institutions provide third parties with access to their banking and transaction data through open APIs. This interface integration enables seamless collaboration between banks and external financial service providers, leading to the development of innovative applications and services.

Open catalog interface (OCI / OCI punchout)

A standard interface protocol that facilitates standardized communication between procurement systems and supplier catalogs. It defines a uniform set of commands and structures for the efficient exchange of product information and prices between different software applications.

Order fulfillment / order processing

The process where a company receives incoming orders, provides the products or services, and carries out the payment or billing.

Order management

All steps from placing an order to the delivery of a product or service. It includes processing, fulfillment, and billing of orders to ensure a smooth and efficient transaction completion.

Order management system (OMS)

A software solution that assists businesses in order management, including order entry, inventory management, order processing, and customer service. It creates transparency for both the business and its customers.

Order to cash cycle

A business process that encompasses the entire sequence from customer order (Order) to payment receipt (Cash). This cycle typically includes order processing, invoicing, accounts receivable management, and payment receipt.

P

Partial fulfilment

A process where an order is processed in multiple parts. It allows merchants to create partial invoices for individual deliveries or services instead of waiting for the complete fulfillment of an order.

Partial shipping

An order that is delivered in multiple shipments. This is helpful when not all items are available at the same time or different products have varying delivery times.

Payment API

An application programming interface that enables merchants to integrate payment functions into their systems. These APIs facilitate the handling of transactions by connecting to payment services.

Payment gateway

A technical solution that enables the secure transfer of payment information between the merchant and the payment processor or bank. It serves as a bridge for payment processing.

Payment institution

An authorized entity that offers payment services, such as executing transfers, card acceptance, and other payment solutions.

Payment methods

Various ways in which customers can settle their invoices, such as credit cards, bank transfers, electronic wallets, or direct debits.

Payment processor

A service that handles the technical aspects of payment processing for merchants, including authorization and settlement of transactions.

Payment service provider (PSP)

A company that enables merchants to accept various payment methods and often offers additional services such as fraud prevention and currency conversion.

Payment terms / Net terms

Agreements between buyers and sellers regarding the payment period and conditions, e.g., Net 30 days, meaning the payment is due within 30 days of the invoice date.

Payout

The process by which a merchant receives payments for products or services into their bank account. For example, if a merchant works with a payment provider for invoice purchasing, the provider can pay the invoice amount directly to the merchant’s account before later receiving the money from the buyer.

PCI DSS / payment card industry data security standard

A security standard that sets guidelines for the secure processing, storage, and transmission of card information.

PCI DSS compliance

Compliance with PCI DSS requirements, ensuring that a company processes and stores card information securely.

Plugin

A software extension that adds additional features to an existing system, often used to integrate payment methods in online stores.

Point of sale (POS)

The location where a sales transaction is completed, which can be a physical cash register system or an online checkout page.

Prepayment

A payment made before the delivery of goods or services. This method is often used to minimize the risk of payment default.

Product margin

The difference between the costs of manufacturing or purchasing a product and its selling price. This margin is important for pricing and profitability.

Product margin

The difference between the costs of manufacturing or purchasing a product and its selling price. This margin is important for pricing and profitability.

PSD2 / second payment services directive

An EU directive aimed at making payment transactions safer and promoting the development of innovative payment services.

PSD3

A continuation of the PSD directives, addressing further developments in the area of payment services within the EU. It focuses on strengthening both consumer rights and data protection as well as promoting competition in the payment sector.

Purchase order (PO)

An official document sent by buyers to sellers to confirm an order. It includes details such as product type, quantity, and price.

R

Real-time payments

Payment transactions that are processed almost instantly, allowing the recipient to receive the money immediately.

Recurring billig / bill

A billing process where customers are regularly (monthly, quarterly, etc.) invoiced for ongoing services or subscriptions. This simplifies billing and allows for a predictable revenue stream.

Recurring payment

Automatic payments deducted at set intervals from a customer’s account. This is typical for subscriptions or long-term service contracts.

Refund

The repayment of money to a customer, usually because a product was returned or a service did not meet expectations.

Repeat customer / repeat-buyer

Customers who make repeated purchases from a company. These customers are valuable as they represent a steady source of income and often incur lower acquisition costs.

Retention rate

The creation of long-term relationships with customers through ongoing satisfaction and engagement. Strong customer retention leads to repeat business and can generate positive word-of-mouth.

Return on advertising spend (ROAS)

A measure of the financial success of advertising expenses, assessing the revenue generated by advertising relative to the costs of advertising. A higher ROAS indicates a more effective advertising strategy. ROAS is calculated as follows: Revenue / Advertising Costs x 100 = ROAS in percent.

Risk management

The process of identifying, analyzing, and minimizing potential risks that can affect a business. This includes monitoring financial, legal, and operational risks.

S

SEPA direct debit

A payment system that allows for direct withdrawal of money from a customer’s bank account in Europe. This method is particularly efficient for recurring payments.

Share of wallet (SoW)

An indicator of what proportion of a customer’s total expenditures a company can capture. A higher SoW means that customers spend a larger portion of their budget with a particular company.

Small or medium-sized business (SMB)

Businesses that remain below certain thresholds in terms of employee numbers, turnover, or balance sheet total. They play an important role in the economy and often have specific needs and challenges.

Sole trader

A business model where a single individual owns and is responsible for the company. This form is often found in small businesses and startups.

Stock keeping unit (SKU)

A unique identifier for products that allows for the management of inventory and tracking of sales. Each SKU represents a specific item variant.

Strong customer authentication (SCA)

A security process in online payment transactions that verifies the identity of customers using at least two independent methods. This enhances the security of online transactions.

Subscription

An agreement to regularly receive products or services against a recurring fee. Subscriptions create continuous customer engagement and a source of income.

Supply chain financing (SCF)

Financial solutions aimed at improving the capital flow and efficiency in a company’s supply chain. SCF can help optimize payment terms and avoid liquidity shortages.

T

Take rate

Refers to the set prices or fees for services or products. In the B2B context, it often relates to cost structures for services or transactions.

Tele-sales

The sale of products or services over the phone. An effective method for B2B merchants to directly contact potential customers and close deals.

Trade account

A special account that merchants use to process credit and debit card payments. It is an essential component for businesses offering cashless payment methods.

Trade credit

A credit granted by suppliers to their business customers, allowing them to purchase goods or services on account and pay later.

Traditional payment methods

Payment methods that were common before the digitalization of the financial sector, such as checks, bank transfers, or cash payments.

Transaction processing

The process through which a financial transaction is completed. This includes authorization, capture, and transfer of the payment.

Transactional fee

A fee charged for conducting a single transaction. It is often required by payment processors or banks.

U

Underwriting

A contractual commitment where a third party (the guarantor) assures to stand in for the debts or obligations of a debtor.

Unpaid invoices

Invoices that have not yet been settled by customers. They can impact the liquidity and working capital of a company.

Upsell

A sales technique where customers are offered higher-value or additional products and services to increase the value of the sale.

V

V-commerce / virtual-commerce

Trading conducted over virtual platforms such as online stores or e-commerce websites. It enables companies to reach a wide customer base.

Value added tax (VAT)

A tax on the sale of goods and services, typically paid by the end consumer. For businesses, it is a pass-through item.

VAT identification number (USt-ID)

A unique number for companies within the EU, used for cross-border trade and VAT purposes.

Verified order

An order confirmed through additional security measures or checks to ensure the authenticity and safety of the transaction.

Virtual card

A digital card number used for online payments without issuing a physical card. It enhances security and control in online transactions.

W

White label

Products or services produced by one company and then sold by another company under its own brand.

Working capital

The financial resources needed for daily business operations. It includes elements like cash, receivables, and inventories.

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