In the ongoing struggle against paper, service providers have processed paper verification in B2B payments for years, with minimal success. There is evidence that change is happening, albeit slowly.
ACH is often assumed to be a pay railroad preparing to take over paper checks as a dominant rail in B2B payments. In fact, research released by NACHA last year found that suppliers are also expecting this. CEOs told researchers that they expected ACH to make up 45 per cent of their payments by 2020, while checks would fall to 34 per cent.
However, just because sellers expect ACH to carry out checks, this does not necessarily mean they want this change to happen. According to Ernest Rollsvon, the executive director of Finexio Electronic Business Payments as a Service (PaaS) is rarely an enthusiastic consumer of e-payments, regardless of whether service providers and corporate buyers are willing to do so.
"That's what we want, and what our customers want," she told PYMNTS recently about reinforcing electronic bars in accounts payable. But it is about how to get the right amount – Sometimes, we know that sellers will never take the card. "
For this reason, global service providers in B2B payments must include support for paper checks, as may the railroad. At least, the third-party service provider can reduce the friction of checks by printing and mailing to customers, which reduces the cost and time lost.
In some ways, it is a necessary evil, as suppliers still prefer to receive paper checks, despite the industry's efforts to pay electronic payments.
"I do not see suppliers keen to get rid of checks at all," noted Rollson. "It's really a lack of education."
This is a major challenge for online business payments: how to enable companies to pay by the rail you want, especially when you want to pay electronically, while reducing the friction for sellers to receive payments. Some players in the market are taking a new approach to adopting electronic payments in B2B, other than forcing suppliers to accept payments. Instead, they develop multi-rail tools through which buyers can use a single rail and can be obtained by their suppliers through another rail.
This is the tactic behind CredX, the new Finexio solution announced this week, which allows companies to publish their products and physical or virtual cards in the Finexio platform. Companies can pay using their cards, while suppliers are still receiving payments by checks or ACH.
This is the inclusion of check services that are very important for the B2B high-paying service, notes Rolfson. Although paper checks are expensive and come with a heavy burden of friction, sellers are struggling to manage the card acceptance account, and are not happy about switching to ACH.
"The truth is that ACH has very latent vulnerabilities," he said, citing data issues and speed. "People do not want to register at ACH There will always be a certain percentage of checks, as a payment company, how can I find a customer in my face and say," We'll help you in your payments – oh, but those [payment checks] Can not we help you with "?"
Rollson pointed out that while the research certainly shows an increase in the volume of ACH in the area of B2B payments, his novels, it has not seen accelerated adoption of ACH.
"I certainly do not see people demanding ACH," he added.
Last year, large investments by credit card giants – Including Visa, Mastercard, and American Express – The interest on the business card opportunity has been raised in accounts payable. Looking further down the road, Rolls- ton said he felt that the acceptance of business cards was accelerating on the seller's side, as a result of the industry's focus not only on the side of the issuance of the card but on the side it acquired from the deal – the seller's side.
The NACHA report itself predicted that only 12.5 per cent of the B2B transactions received by vendors through the trade card would be by the end of the decade. However, given the renewed investment in commercial card services and solutions, as well as emerging offerings that allow sellers to receive credit card payments across a different route, it is likely that business card adoption will be higher in B2B payments by 2020.
Regardless of the railway that reaches the top, no single payment technique will be the only tool used to transfer money between companies. "One size fits all is not the best strategy for dealing with the issue of paper in commercial payments," said Rollson, adding that it was necessary for suppliers to work on both sides of a deal to reduce friction significantly. as possible.
With greater focus on the acquisition side of the transaction, the growing reliance on business cards is likely to address the lack of supplier education on the shift from paper checks and the promotion of increased online payments via rail.
"The side I've been issuing has been for some time, and I think the acquired side is starting to reach it, which will lead to acceptance by vendors," said Rollsson. "I see we're still in a very strong five-year growth curve and I'm seeing a lot more coming in and more banks are entering the game – which means the education problem about accepting e-payment will continue to improve."