Barriers Continue to Obstruct Adoption of Electronic Payments in B2B Transactions

The AFP 2004 Electronic Payments Survey, however, also finds that a number of significant barriers obstruct progress toward the wider use of electronic payments by businesses. While more than 75% of B2B payments are currently made by paper check, 28% of respondents to the survey indicate that their organization is very likely to move to electronics for the majority of their B2B payments in the next three years. Additionally, half (50%) of respondents said that it was somewhat likely that their organization would move to electronic payments in that time period. The increased willingness to move away from checks is in sharp contrast to an AFP survey conducted four years ago, when only 9% strongly agreed that their organization was likely to convert to electronic payments within the next three years. The survey found that large organizations send and receive significantly fewer check payments than smaller organizations, and are more likely to have integrated their accounts payable (A/P) and/or accounts receivable (A/R) systems. For example, 56% of larger organizations said in the survey that they have already integrated part or all of their accounting systems with an electronic payments system, compared to 35% of smaller organizations. Financial professionals identified barriers that obstruct progress toward wider adoption of electronic payments in B2B transactions. In the survey respondents gave nearly equal weight to four major barriers: accounting systems that are not integrated with electronic payment systems; shortage of IT resources; lack of a single standard format for remittance information; and trading partners who cannot send or receive electronic payments with sufficient remittance information. Survey respondents also pointed to four wish list solutions from bankers and software vendors that would increase their use of electronic payments: accounting software that integrates with electronic payments; bank services that provide straight-through electronic payment processing to accounting systems; a standard data format; and improved fraud control over Automated Clearing House (ACH) payments. In spite of the obstacles, financial professionals report slow but steady progress in the move to electronic payments for B2B transactions. To comply with Sarbanes-Oxley -- or for other business reasons -- 28% of respondents state that their organizations will purchase software or use a third party service to integrate accounting and electronic payment systems. Eighteen percent (18%) will implement software that links their financial systems with those of their suppliers or customers. Others will take a different route to an electronic system. Using the check image capabilities that are an outgrowth of Check 21, over a quarter (28%) of organizations plan to image the checks they receive and send images to their banks for clearing and settlement. Respondents report that ACH credits are currently the most widely used electronic payments method, followed by wire transfers. Purchasing cards are not often used as a primary payment method.