A young woman with bobbed, wavy auburn hair stands at the checkout desk in a shop filled with potted plants. She wears a dark blue dress, cream cardigan, and a necklace made of chunky orange beads. Her hands are folded on the desk and she smiles at the cashier, who faces away from the viewer and holds a credit card above a digital tablet to complete the transaction.
In addition to clear payment terms, your business should have a clear refund policy that includes where and when products can be returned and what form the refund will take. — Getty Images/Cavan Images

Business-to-consumer, or B2C, companies have a relatively straightforward sales process in comparison to business-to-business (B2B) brands. In a B2C transaction, the customer pays for their item at the initial point of sale or, in some cases, before they receive the item. For instance, a customer ordering a T-shirt from an e-commerce site has to submit their card details before the shirt is shipped.

As a result, payment terms for B2C companies are often more straightforward than for B2B companies. Here are some things to make sure your B2C business includes in its payment terms when serving customers.

Share what types of payments your business is able to accept

Payment flexibility removes any friction a customer may feel in completing the transaction by making it clear the various methods of payment you accept. Whether you’re selling your product or service via phone, in person, online, or through your mobile device, make it clear what types of payment methods you are able to accept, such as cash, checks, credit and debit cards, gift cards, Apple Pay, and Google Pay.

[Read more: B2B vs B2C: What's the Difference?]

Consider offering payment plans

Payment flexibility could include adding a “buy now, pay later” option to your checkout process. According to Yotpo, 67% of young consumers don’t have credit cards. Your payment terms could allow these customers to pay using a buy now, pay later app — such as Klarna, Zip, or Afterpay.

These apps are good for your revenue, too. “Let’s say a customer wants to buy a jacket that’s on sale for $100. The customer doesn’t have a credit card, and doesn’t want to use their debit card because they don’t get paid until after the sale is over. Without a ‘buy now, pay later’ option on the product page, you’ll lose that sale,” wrote Yotpo.

It’s possible to offer a payment plan without using an app, but be careful to make the terms of your installment plan crystal clear. Ideally, you’ll set up an automatic recurring payment through your payments processor that charges the customer’s linked account on a set schedule.

Payment security is top-of-mind for many B2C customers, especially those shopping online.

Set a clear return and refund policy

Returns and refunds are among the biggest frustrations among B2C customers. Research from Pitney Bowes found that 54% of shoppers are unlikely to buy a product they want if the merchant has an unclear or poor return policy. Your payment terms should define what your returns and refund policy is, including things like:

  • Which items are eligible for return or exchange.
  • The time limit for returns or exchanges (e.g., 30 days after sale).
  • Condition requirements for refunds (e.g., an item has to be unworn/unwashed).
  • How you will refund payment (e.g., via the original payment method or store credit).
  • How the customer can request a return or exchange.

Your refund and returns policy can help set expectations with customers before they complete their transaction, and avoid frustration for everyone if there’s a future issue.

Speak to payment security

Payment security is top-of-mind for many B2C customers, especially those shopping online. In your payment terms, include a few lines about the steps your business is taking to keep customer data secure.

In the 2022 Global Digital Shopping Index from Cybersource, a Visa solution, consumers said they wanted more post-purchase security. Consumers wanted to shop with the confidence that retailers would refund fraudulent charges, with refunds credited in-store or online. They also wanted the security of 24/7 customer support through multiple channels, including phone line, email, and online chat support. If your business offers these measures, include them in your payment terms to help consumers shop with ease.

[Read more: Guide to Negotiating Payment Terms With Your Vendors]

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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Published January 09, 2023