More Ways to Pay: How Payment Choice, Incentives, and Settlement Speed Shape Working Capital

Payment costs are climbing, margins are thinning, and customers are taking longer to pay. 

69% of finance leaders report a rise in late B2B payments—cash that should be funding payroll, inventory, and growth instead sits trapped in receivables.

Left unaddressed, that gap forces hard choices. Unexpected accounts receivable (AR) issues push finance leaders to rework strategic decisions like capital investments, hiring plans, and borrowing. The cost of a slow, rigid payment process is no longer an operational nuisance. It’s a drag on the balance sheet. 

Most finance teams treat the payment experience as a fixed cost of doing business. It isn’t. The payment options you offer, the incentives you attach to them, and the speed at which each one settles and reconciles add up to one of the most underused working capital levers available. Get the mix right and cash arrives faster, friction falls, and customers keep buying from you. Get it wrong and a broken process quietly bleeds liquidity. 

These payment rules define what payment methods you accept for any transaction, when credit or debit cards are offered, and how you govern card and bank-to-bank usage. But payment decisions don’t have to be formed in a vacuum: an understanding of customer behaviors and a careful weighing of the trade-offs involved should inform your strategy and fuel each choice you make. 

This piece breaks down four decisions that determine how much working capital your payment strategy releases: surcharging and discounting, payment-type tradeoffs, settlement timing, and the incentives that shape how buyers actually pay.

Credit cards account for approximately 31% of all payment transactions across the United States. That alone is reason to keep them in your payment mix. But cards carry processing fees that can run as high as 4% in today’s market. According to the Nilson Report, U.S. merchants paid more than $187 billion in card processing fees in 2024 alone. 

This makes card acceptance one of the largest operating costs after labor and occupancy. Stacked on top of rising supply costs and other margin pressures, those fees can feel prohibitive, especially for smaller suppliers operating on thin margins. 

Surcharging is one way to offset those costs and stop processing fees from eating into working capital. But surcharging is also a pricing decision with real customer consequences. It deserves careful scrutiny—to determine whether it’s right for your customer base, if it will drive faster payments for you, and how to manage the user experience in a way that minimizes friction.

A surcharge is an extra fee a merchant adds when a customer pays by credit card, designed to recover the processing fee the merchant would otherwise absorb. J.D. Power found that 34% of small businesses in the United States add surcharges to their credit card transactions. They take three common forms: 

• Fixed-fee surcharge: A flat amount per transaction, such as $0.30. 
• Percentage surcharge: A percentage of the transaction, such as 2.5%. 
• Blended surcharge: A fixed fee plus a percentage, such as 2% plus $0.10.

Surcharging is different from other payment mechanisms available to merchants: 

• Discounting: A reduction added to the amount customers owe a business. Discounts come in two standard forms: trade discounts that happen at the time of sale, and cash discounts, offered to encourage early payment of an invoice or a preferred payment method (for instance, a payment type without high processing fees). 
• Convenience fees: A flat fee charged—with clear disclosure—for the privilege of paying with a non-standard payment method, for instance for over-the-phone payments. 
• Platform fees: A flat fee, subscription-based fee, or transaction percentage levied by online platforms for the use of their platform. This helps cover the operational costs of running the platform—for instance maintenance, support, and development.

Two pressures are pushing the conversation forward. First, late payments keep tightening working capital: 55% of finance leaders report more requests for longer payment terms, and 53% see more requests for payment plans. Second, card economics are getting more expensive. Visa’s Commercial Enhanced Data Program (CEDP), launched in April 2025, imposes stricter transaction-data requirements on business card purchases—and higher fees on merchants who fall short. 

This same environment, in turn, makes credit cards more attractive to customers. Credit cards have the advantage of effectively extending payment cycles by an additional 30 days—a popular option for customers seeking longer payment terms. 

To offset the processing costs, many merchants turn to surcharging. It can recover real money, but it can also trigger customer behavior that erases the savings, which is why the next question is whether it fits your business at all.

Surcharging is a pricing decision every business needs to make—but one that also comes with real customer consequences. Before making your choice, you should understand the potential impacts surcharges can have. That starts by recognizing the advantages and disadvantages:

The clearest advantage is cost recovery. Credit card processing fees can eat into profit margins, and surcharges offset those costs to help ensure merchants have enough working capital to meet their operational needs, especially in a landscape where late payments are the norm. This means surcharging makes business sense for some merchants. Specifically, those with: 

• A high volume of credit card sales 
• Thin contribution margins 
• Limited local price competition 
• Customers who buy on urgency, convenience, or business necessity rather than price alone

While many merchants apply surcharging hoping it will drive customers to alternative payment options like ACH, that isn’t always the case. B2B payment portal behavioral data shows there isn’t a clean one-to-one transition from credit card to ACH when surcharging switches on. 

Instead, many buyers bypass the digital payment portal entirely and pay by bank bill pay, wire, or check. These slower, more manual methods drag cash flow and add reconciliation work. Checks, specifically, are harder to track, with less of a guarantee and higher costs associated with manual administration. These slowdowns can make cash flow less predictable and hold up customer buying power, stopping them from making more purchases right away. 

Surcharging can also add friction to the customer experience, potentially resulting in churn, especially in cases where your customers are buying largely based on price.

Surcharging is a pricing policy you own and revisit—not a one-time configuration. But there are a few best practices to consider as you put your strategy into place:

Use the surcharge evaluation framework below before you switch anything on. It’ll help you identify whether surcharging is right for your business, or whether it could prove detrimental (or even illegal) given your business model, target market, or location.

Surcharges apply to credit card payments only—not debit cards or other methods—and they’re banned outright in some regions, including Maine, Connecticut, Massachusetts, and New York in the U.S. and Quebec in Canada. Even where surcharging is legal, regulations are strict, so keep current on the policies in your area.

There are caps in place that limit the amount you can surcharge. These vary between credit card providers and regions, and it’s up to you to keep track of them and ensure you remain compliant.

92% of cardholders expect businesses to disclose surcharges before a payment is processed. But transparency is more than a nice-to-have: networks like Visa require you to disclose surcharges on the receipt and at the point of sale.

Surcharging may be a hot topic for merchants today, but it’s only one factor to consider as you determine your payment options. While credit card use is still ubiquitous, for example, ACH is also becoming a popular payment option, with B2B ACH payments rising 11.6% to 7.3 billion payments in 2024. And in 2025, 26% of B2B payments were still made by check, meaning that while this form of payment is dwindling in popularity it still remains relevant. 

Giving buyers more ways to pay opens more paths to faster cash. But every method carries tradeoffs across cost, speed, and risk, and each one lands differently on working capital.

Settlement times are measured based on the trade date + the number of business days involved to settle. For instance, T+0 settles on the same day, and T+1 takes one business day. Every payment type has a standard range you can expect: 

• Credit card payments: Settlement generally takes one or two business days (T+1 or T+2). 
• ACH payments: Settlement timing on ACH payment varies depending on the financial institution, typically ranging from two (T+2) to five days (T+5), with some settling on the same day (T+0). According to Nacha, which manages the ACH Network, Same Day ACH payment volume grew 45.3% year-over-year in 2024. 
• Check payments: The amount of time it takes for a check to settle depends on the type of check—a personal check, for instance, takes longer to clear than a government check—and can vary anywhere between one (T+1) and seven (T+7) business days.

Faster settlement turns receivables into usable cash sooner, shortens the cash conversion cycle, and pulls down DSO. The difference is concrete. 

Consider a supplier processing $500,000 in monthly receivables as an example. At a 6% annual cost of capital, two days of float on $500,000 costs approximately $165 per cycle or around $2,000 per year. Across a $10M receivables portfolio, that's $40,000 sitting in transit. 

This is where education often breaks down. In real platform migrations, customers have defaulted to slower settlement simply because no one explained the financial upside of paying for faster access to funds. Focused on avoiding a small, visible fee—say $50—they miss the far larger benefit of accelerating cash inflow. The fee is easy to see. The cost of waiting is not.

To reduce your settlement timing and improve DSO, observations across B2B platform migrations show it’s helpful to optimize your payment mix to favor payments types with shorter settlement times. 

Accounts receivable automation tools can also help cut your settlement times by speeding up reconciliation, reducing the risk of errors, and routing transactions in a way that settles faster.

Payment options, discounts, surcharges, and settlement speed don’t work in isolation. Together they shape both how customers behave and how predictable your cash flow becomes. Getting the combination right is less about recovering costs than about building cash predictability, speed, and access—and stronger customer relationships along the way.

Every payment choice pulls on two ropes at once: working capital and customer experience. The “liquidity equation” is the discipline of weighing both on each decision, maximizing the cash you free up while minimizing the friction you create. The examples below show how the two sides trade off.

The goal is to make choices that balance both sides of the equation—reducing friction as much as possible while removing working capital strain.

Customer behavior data can also help you narrow down your payment options and the incentives you offer. Certain payment choices will motivate buyers to pay faster or buy more, while others will inspire churn. 

According to behavioral economics, buyer behaviors will vary based on whether they view a business choice as a “reward” or a “penalty.” Understanding the difference can help you choose the right payment approach. The examples below show how.

By understanding these behavioral triggers and simplifying your payment environment through tools like accounts receivable automation and an online payment portal, businesses can build a landscape that inspires faster payments, while removing friction from the customer experience at the same time. Our research supports that, showing that 63% of finance leaders say that accounts receivable automation has reduced payment delays.

The payment experience isn't a cost center to be minimized. It's a lever to be managed and one that works in both directions. 

When suppliers give buyers more ways to pay, buyers get flexibility, transparency, and the trust that comes from a frictionless experience. Suppliers get something just as valuable: cash that arrives faster, more predictably, and on terms they helped design. 

That's the real working capital argument. Not surcharging vs. cash discounting. Not T+0 vs. T+2. Those are the decisions. The strategy is understanding that every payment option you offer, every incentive you attach, and every day you shorten settlement is a choice about how much working capital your business can access and when. 

Payment costs will keep rising, and buyers will keep stretching terms. The suppliers who treat payment choice as a financial strategy, not a back-office setting, will be the ones turning every transaction into working capital that arrives sooner.