Mobile payments are booming in business-to-customer (B2C) circles, but meanwhile US companies are still clinging to cheques as their main method of business-to-business (B2B) payment.

B2B Electronic Payments: Still Major Drawbacks to Adoption in US

Over 70% of the US companies and organisations surveyed are having difficulty switching over to electronic payments. This is the main finding of a report from the Association for Financial Professionals, the AFP Electronic Payments Survey 2013, published in mid-November in collaboration with J.P. Morgan. The main reasons given by survey respondents were: difficulty convincing customers to pay electronically (82%), difficulty convincing suppliers to accept e-payments (74%), a shortage of IT resources for implementation (71%), lack of a standard format for remittance information (70%), and lack of integration between electronic payment systems and accounting systems (66%). As a result, only 11% of those organisations today use mobile technology to make payments, and only 32% are planning to do so during the next three years. Despite a substantial decrease in use since 2007, the cheque continues to hold its own, and is still used for half of all B2B transactions.

Electronic payments: easier payments management and greater security

Among organisations that make cross-currency payments, 65% have now opted to use electronic bank transfers.  Some 57% of the finance directors polled for the survey specifically referred to the cost savings achieved through this means of payment, while improved cash forecasting (46%), fraud control (39%) and more efficient reconciliation (37%) were the other main advantages mentioned. Meanwhile, the reason why cheques are still the bedrock of national transactions is perhaps the fact that the format can be now dematerialised. Imaging of cheques or conversion of cheques to the Automated Clearing House (ACH) debits processed by the Federal system have become widespread and in doing so have served to prolong the life of paper cheques. Meanwhile just 44% of the firms polled use electronic data interchange (EDI) for receiving remittance information linked to ACH payments, while 74% use e-mail and 22% still use the fax machine for such communication.

Information systems in need of an update

US companies overwhelmingly use the Automated Clearing House system for payments, which facilitates both traditional and electronic payments. Fully 78% of the companies surveyed have integrated their ACH systems into their information systems and 73% are set up to receive payments in automated fashion. However, when it comes to card payments, the figure is much lower. Less than half the organisations polled have integrated card payments automatically into their information systems and scarcely more than a third are today able to carry out payment reconciliation in their systems. However, even though a relatively low number of the US organisations responding already use mobile payments, many are currently assessing whether to introduce mobile tools over the next three years, 37% of them for reviewing payments sent or received, the same proportion for reviewing balance and other payment information, and 36% for approving payments.

By Pierre-Marie Mateo