If you’ve ever been looking to open a bank account for C2B or B2C payments operations, then keep reading on. We will be providing a full guide on where and how to open such account.
Consumer-to-Business (C2B) and Business-to-Consumer (B2C) accounts are prevalent across a wide range of industries. These types of accounts are typically associated with businesses that engage in direct transactions with individual consumers or clients. Some of the most common industries where C2B and B2C accounts are needed:
Financial services industry: financial services companies like investment brokers, payment institutions, investment funds and similar, need C2B collection accounts to collect payments from clients and B2C payout accounts to distribute payments to clients as withdrawals or third party payments.
Gambling and betting. Gambling, gaming and betting companies need C2B and B2B accounts for a very similar reason that financial services related companies do. Many clients in this industry wish to deposit and withdraw funds using bank transfers instead of credit cards.
Retail and e-commerce: Online marketplaces and e-commerce businesses rely heavily on B2C accounts to receive payments from online shoppers. They may also have C2B accounts for transactions with sellers and suppliers.
Telecommunications: Companies that offer phone, internet, and cable services use B2C accounts to collect monthly payments from individual consumers.
Healthcare: Healthcare providers, including hospitals, clinics, and pharmacies, often have B2C accounts for processing patient payments and managing their accounts. Health insurance companies may use C2B accounts for policyholders.
Utilities: Utility companies for electricity, water, gas, and more typically maintain B2C accounts for collecting payments from residential customers.
Subscription economy: Businesses offering subscription-based services, like streaming platforms, magazines, or software-as-a-service (SaaS), often use B2C accounts to handle recurring payments from individual subscribers.
Travel: Travel agencies, tour operators, and airlines typically deal with B2C accounts for customer payments.
And many more industries that heavily rely on C2B and B2C payment flows to conduct business efficiently.
Why Do Companies Need C2B and B2C Bank Accounts?
There are several prevailing reasons why C2B and B2C accounts are needed, especially in regulated industries (activities that require a license). We will discuss several most common reasons below:
To segregate client funds: Keeping separate bank accounts for C2B and B2C transactions helps businesses segregate their personal finances from their business finances. This separation is especially important in industries that require activity license. This way client funds can be protected.
To trace funds movement: Maintaining separate accounts allows for better traceability of funds. It makes it easier to track income and expenses associated with specific types of transactions, helping businesses monitor their financial performance.
To be compliant with regulations: Depending on the jurisdiction and industry, there may be regulatory requirements for businesses to keep customer funds separate from their own operational funds. This separation ensures the protection of consumer funds in the event of business insolvency or financial issues.
To process payments smoothly: Businesses may use different payment processors, gateways, or accounts for C2B and B2C payments to optimize payment processing and fee structures. For instance, they might use one account for direct online consumer sales and a different account for third-party payment collection from individuals.
To manage risks: Separating C2B and B2C funds can help mitigate risks associated with chargebacks, disputes, and fraud. If a dispute arises on one side (e.g., a customer disputes a payment), it won't affect the overall financial health of the business as much.
How To Open C2B and B2C Bank Account? Easy 4 Steps Guide.
Opening C2B and B2C bank accounts typically involves a similar process to opening any other type of business or personal bank account.
Lets start with choosing a banking service provider, a topic that we have covered in length here. If you would like to receive an up to date list of banks that can provide C2B and B2C accounts for any industry, contact us here and we will send you a list by email.
Secondly, you would have to provide a documents package for internal due diligence assessment of a chosen bank. Here is the most common list of documents that you should prepare in advance and submit together with your application:
-Memorandum and Articles of Association; or Articles of Incorporation
-Certificate of Registration/Incorporation; or Certificate of Formation
-Official list of directors
-Share certificate(s); or Any commercial registry document containing information on the beneficial ownership
-An ownership organisation chart signed by one of the company’s corporate officer showing the last ultimate beneficial owners.
-IDs for all Ultimate Beneficial Owners and at least two directors and all Authorised Signatories
-Proof of the trading address: Bank statement or Utility bill (water, electricity, gas, landline phone) dated within 3 months
-Business plan or description of the business and agreements/Invoices to confirm this
-Purpose of the account, expected monthly volumes, currencies and countries involved
Thirdly, complete the application and sign agreements. You will have to agree on commercial conditions, prepare for API integration and sign the agreements. We highly recommend to review all relevant charges and commitments, as those might be based on your business nature/volumes. You want to be sure that they correctly match your business scale.
Finally, set up online banking tools and finalize API integration. Nowadays majority of the banks provide an access to online portal or online banking tools that will help you to optimize your banking operations. We do highly recommend to integrate via an API, which have loads of benefits, that we discussed in this article.
As you finalize the bank account opening, you now may start enjoying the benefits C2B and B2B bank accounts will bring to your business.
In conclusion, C2B and B2C bank accounts play a crucial role in various industries, enabling businesses to efficiently manage transactions with individual consumers and clients. These accounts are essential for segregating funds, complying with regulations, tracking financial movements, optimizing payment processing, and managing risks. The process of opening these accounts involves selecting a suitable banking service provider, providing the required documents, completing the application, and setting up online banking tools and API integration. By understanding the importance of these accounts and following the necessary steps, businesses can streamline their financial operations and better serve their customers in a wide range of industries.