Management Information System (MIS) Practice Exam

Why are credit cards and electronic payment services not commonly used for large B2B transactions?

1. Risks associated with these services

2. Complications arising out of transactions

3. Preset spending limits

4. Expenses associated with these services

The correct answer is: Preset spending limits

The selection highlighting preset spending limits accurately captures a key reason why credit cards and electronic payment services are not widely used for large B2B (Business-to-Business) transactions. In many cases, credit cards come with predefined limits that may not accommodate the high transaction values typical in B2B dealings. Businesses often engage in transactions that far exceed these preset limits, which makes credit cards impractical for their needs. Large transactions can involve significant sums, and without sufficient credit limits, the use of credit cards might require multiple transactions, leading to inefficiencies or operational disruptions. This is markedly different from consumer transactions, where the average purchase is significantly lower and thus more easily fits within standard credit limits. In comparison, other options address relevant concerns such as security risks, complications in transaction processes, and costs associated with these services. However, it is the issue of spending limits that directly impacts the viability of credit cards and electronic payments for larger transactions, making it a decisive factor in the context of B2B operations.