While many companies have the technology in place to handle electronic payments, the majority of business deals still depend on paper cheques. But that may be changing as enterprises look to overhaul inefficient financial processes, industry watchers say.
Research released Wednesday by MasterCard International and software maker Ariba Inc. predicts an up-tick in adoption of electronic payment technologies. The vendors surveyed 105 purchasing professionals in companies with at least US$500 million revenue.
They found many companies already can handle electronic payments through e-business systems such as electronic data interchange (EDI). Two-thirds of survey respondents use some form of Electronic Invoicing Presentment and Payment (EIPP) technology to streamline their financial management processes. Of those, 62 per cent use EIPP technology to make electronic payments to their suppliers, and 35 per cent use the technology to receive payments from customers.
Nonetheless, the bulk of transactions use paper cheques. Among this year’s estimated 9.6 billion business-to-business (B2B) transactions, 80 per cent will be done with a paper cheque, according to Alenka Grealish, an analyst at research firm Celent Communications LLC.
“Although paper checks continue to be the dominant payment method for B2B transactions today, the opportunity for electronic payments to displace paper is enormous,” Grealish said in a statement. Grealish expects that electronic B2B payments will grow from 20 per cent today to almost 50 per cent by 2010.
In the MasterCard-Ariba survey, 69 per cent of companies that don’t currently have EIPP systems reported plans for a future deployment, most within two years.
Time and money are driving this EIPP adoption: 51 per cent of survey respondents cited the reduced processing time and resulting lower costs as the primary benefits of using EIPP. However barriers to its adoption still persist. Respondents cited cost (25 per cent), complexity (22 per cent), and aversion to making changes to their IT systems (19 per cent) as the top reasons for not deploying an EIPP system.