Cheaper, faster, more secure—what’s not to like about electronic payments? While the advantages that e-payments provide over paper checks seem obvious and sizable, business-to-business (B2B) transactions are making the switch somewhat slowly. Meanwhile, though, financial institutions are making new efforts to simplify companies’ adoption of electronic payment methods.
A survey released by the Association for Financial Professionals (AFP) late last year found companies were making 50% of B2B payments by check, down from 57% in a 2010 AFP survey. Other research suggests the use of checks is even more prevalent among smaller businesses. Moreover, the AFP data point to a deceleration in the move to electronic payments. The organization’s previous electronic payments survey showed a 23% drop in the use of checks over three years, from 74% of B2B payments in 2007 down to 57% in 2010.
For companies that are wary of handing out their bank account information for fear it will be used by fraudsters, Universal Payment Identification Codes (UPICs) may provide a solution. UPICs are pseudonyms for bank accounts—numbers that look like regular account numbers but can’t be used to debit the account. [See sidebar, "An Alias for Your Bank Accounts," below.]
In B2B commerce, payments are just part of a process that starts with a purchase order, continues with an invoice, and finishes when the buyer has reconciled its accounts.