Wholesale payments – a guide to the benefits and drawbacks

Want to learn more about different wholesale payments and their respective benefits and drawbacks? Then you’ve come to the right place.

In this blog post, we will go through the benefits and drawbacks of the 3 most common wholesale payments used in the industry.

Wholesale payments

About wholesale payments

If you’ve clicked on a blog post about wholesale payments, we are sure that you already know the wholesale fundamentals.

That’s why this section will not go into details about wholesale in general. Instead, this serves as a brief introduction to why wholesale payments are so special.

Wholesale and B2B payments vs. B2C payments

To understand why wholesale and B2B payments are unique, you need to understand their underlying difference from B2C payments.

First of all, wholesale transactions are typically much larger than retail transactions. A wholesale customer will, in most cases, buy multiple units of the same product. A consumer, on the other hand, would typically only purchase for their private consumption.

Second, wholesale transactions are more complex than retail transactions. In wholesale, it is common for the wholesale brand to offer differentiated prices and payment terms for different wholesale customers based on individual negotiations.

(Read our article about wholesale pricing).

Lastly, while B2C customers have to pay for their purchase at the point of sale, B2B and wholesale customers are often allowed to pay later. This credit is given because the wholesale customer repeatedly purchases from the wholesale supplier, building trust between supplier and customer.

Having established the main differences between wholesale / B2B payments and B2C payments, let’s move on to the different methods of payment in wholesale.

Different methods of wholesale payments

Typically see three different types of wholesale payments:

  • Invoice
  • Credit card
  • Check

Each of these methods has its benefits and drawbacks that we will go into detail with below.


The most common method of payment used in wholesale today is invoicing. When using wholesale invoices, the customer doesn’t have to pay for their order until after shipment.

As mentioned in the last section, wholesale orders are typically much larger quantities and hence costs. Letting your wholesale customers pay by invoice allows them a line of credit, and enables them to resell some of your products before they have to pay for them.

The number of days the customer has to pay their invoice mostly varies between 8 and 90 days.


Benefits of wholesale invoices

As mentioned above, paying by invoice is the norm as is very convenient for your customers. It’s a way to keep your customers happy by helping them improve their cash flow. Ultimately, this might mean that they are more likely to order larger amounts and more frequently.

Another benefit of using invoices for wholesale is the relatively low transaction costs. Invoices usually get paid via the bank, and often incur zero costs to either party of the transaction.

Drawbacks of wholesale invoices

The main risk of using invoices for wholesale is that your customers do not pay after having received their shipment. On rare occasions, the lack of payment is intentional. In most cases, however, a lack of payment is simply because the customer does not have the money to pay.

Luckily, in most cases, your customers do pay for their orders. But using invoices still takes a toll on your cash flow. By giving your customers credit and improving their cash flow, you are essentially hurting your own cash flow.

PayStand tells us that the average B2B payment cycle takes 35 days and that 47% of B2B invoices get paid late. So while wholesale invoices might be great for your customers’ cash flow, it is definitely not helping yours.

Credit card

Another wholesale payment option is credit card payments. While credit card payments are quite common in B2C sales, they are not as widespread in B2B and wholesale. In order to use a credit card as payment with these kinds of customers, you must have the right kind—for example, fair credit cards can be great choices if your company plans to do wholesale deals.

Paying by credit card wholesale is not much different from a consumer paying by credit card. If the wholesaler has an online wholesale shop that allows credit card payments, the customer simply puts in their credit card information and confirms the purchase. Just like they would do in any other online purchase.

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While invoices are more common in wholesale, we do see that credit card payments are often used for those first transactions between a wholesaler and a new customer. This way, some trust can be built before allowing the customer to pay by invoice and get credit.

Benefits of credit card payments in wholesale

In opposition to invoices, credit card payments are instant. This means that you will get your money in your account in a matter of days. While this does not help your customers’ cash flow, it certainly improves the cash flow in your own business. If you are a relatively new wholesale brand, this improved cash flow can be crucial.

Another benefit of credit card payments is the convenience. It’s by far the most effortless payment method for both the seller and the buyer.

Furthermore, through online transactions you can get a hold of valuable data, connecting to customer behaviour. Smart credit card processing integrations will also speed up your payment accepting processes, allowing you to provide an even better customer experience as you currently do.

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Drawbacks of credit card payments in wholesale

The major drawback of using credit card payments in wholesale transactions is the transaction fees. The transaction fees differ based on location, volume, etc., but averages between 1.5% – 4%.

Imagine paying a 4% transaction fee on a $50,000 wholesale order. That is a hefty $2,000 that you could surely find some other use for.

Another drawback of credit card payments is spending limits. Some credit cards have spending limits, which can halt the ordering process of your customer. If you are unfortunate, a credit card limit can potentially cost you the deal.


In some countries – like the US – checks are still used in wholesale transactions. In other countries, however, using checks for payment (any kind, not just wholesale) is unheard of.

Despite the declining use of checks, we’ve still included this payment option in this blog post. The reason is that many wholesale businesses have been using checks for years and are the most comfortable paying this way. Also, today, electronic versions of checks, eChecks, exist, which mitigate some of the drawbacks of traditional paper checks.

Benefits of wholesale checks

As mentioned above, some people simply prefer checks. They have used checks for a long time and are accustomed to that. Allowing these customers to continue paying by check is a great way to keep these customers happy.

Another benefit of wholesale checks, compared to credit cards, is that there is no or a low percentage transaction fee.

Wholesale ecommerce solution

Drawbacks of wholesale checks

While there are few direct costs (other than the cost of the actual checkbook), there are some hidden costs. These costs come in the form of time spent collecting and reconciling the check.

Another drawback of checks is the manual approach and risk of errors or fraud. Also, there is the risk of bounced checks, which will incur a fee.

What type of wholesale payment should you use?

So, what type of wholesale payments should you use? The truth is that there is no one answer. It all depends on your brand, the industry you operate in, the size of your company, and your relationship with your wholesale customers.

Sometimes, you might even get to have a saying. If your wholesale customers are large companies, chances are that they are setting the terms. And if you are not willing to follow along, they will find someone else who will.

Offer a mix of wholesale payments

Our suggestion would be to offer your wholesale customers a mix of some of the different payment options. This way, you can make the most use of the different benefits and drawbacks of each payment method.

Furthermore, your customers would appreciate the option to select between multiple payment methods themselves. In fact, studies show that offering the customer to choose between different payment options can help boost sales.

That’s it for this guide. No go out there and get you some wholesale payment!

We can relieve those pains. And more.

Optimizing your wholesale is what we do. Whether it’s automating processes or help you generate more sales.

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Let’s get your wholesale online. Casper Groot Profile
Casper Founder, Turis

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