Accounts payable procedures can be greatly streamlined by using electronic payments, or ePayments. Don’t rely on our word alone, though. The major advantages and advantages of electronic payment systems for your company and its suppliers will be covered in this blog. Let’s look more closely.
What Are Electronic Payments?
Digital financial exchanges between two parties are referred to as electronic payments, or ePayments. There are numerous variables that could influence a company’s choice to utilise or accept a particular sort of electronic payment. E commerce payments provide many advantages, such as time and money savings, a decrease in payment processing errors, and lower transaction costs.
What Kinds of Electronic Payments Are Most Frequently Made?
ePayments can be divided into four categories on a fundamental level:
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Card Transactions
The most widely used form of electronic payment is through credit and debit cards, while their use among younger generations is waning. Card payments continue to be appealing in part because of the rebates and benefits they provide.
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Financial Transfers
There are various methods for transferring money between bank accounts. One sort of bank transfer payment that is specific to the US are ACH transfers. ACH transfer payments are electronically transferred into the recipient’s bank account, much like direct deposits.
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Virtual Card Payments
A virtual card is a 16-digit number that is produced at random and serves as a “token” that can only be used once and for the given amount. These safeguards are a component of the Payment Tokenization process, which guarantees a secure and unbreakable payment.
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Cross-Border/FX Payments
Businesses can send and receive money overseas via FX payments, including through wire transfers, forward contracts, currency exchanges, and other methods. This is especially beneficial for companies who receive payments for their clients and suppliers internationally.
What Kinds of Electronic Payments Are Usually Favored in B2B?
Both the buyer and the supplier will have a different preferred electronic payment method; nonetheless, ACH payments continue to be the most popular type of e-payment due to its low cost and speed, compared to checks. However, there are a few potential problems with ACH payments. For instance, ACH payments mandate that companies control the bank account information of their suppliers, increasing their liability owing to the possibility of fraud or security breaches. Additionally, as ACH transfers are sometimes detached from the remittance email, suppliers frequently contact or email to inquire as to which invoice an ACH payment pertains to.
On the other hand, virtual cards take care of both of these issues. The quickest method of payment simply needs an email address to be sent to a vendor, making virtual cards the preferred choice. The virtual card number and the remittance information are also included in the email, making it simple for suppliers to process and reconcile the payment.
Additionally, payments can be done more quickly, which can enhance supplier relationships. Given that 58% of businesses reported that over the past year, supplier relationships have become more strategically significant, having a successful AP process in place is essential in today’s market.
