There’s little argument that virtual payments are taking over B2B payment processing. Research indicates that B2B virtual payment volume will double between now and 2018 and skyrocket to over $500 billion by 2024. However, the industry must decide how to address issues raised by buyers and suppliers to make those predictions come true.
What Will Pave the Way for Change?
One of the biggest issues in B2B payment processing is that both buyers and suppliers are comfortable with the way they’re processing payments now – even if the method isn’t the most effective. In order to promote change, financial professionals need incentives, and education is a key to providing it.
There are alternative payment methods that can make the payment process easier, quicker and more secure than it is today. These approaches will also reduce the cost for processing payments. Industry experts estimate that it can cost upwards of $5.00 or more to process a paper check, whereas electronic processing costs just a fraction of that amount.
When financial professionals understand how these systems work and the benefits they offer, they’ll be much more likely to support making changes.
Both buyers and suppliers want control over how they process and receive payments. Neither group wants to be locked into one type of payment processing. In addition, they want the ability to implement systems that let them evolve from their legacy systems into the brave new world of virtual payments.
Buyers want their payment processing to work seamlessly with their accounts payable system, including remittances, tracking payments and reporting. They want to get their payments processed quickly, correctly and securely. On the other hand, suppliers want to know when buyers have received their invoice and its status.
Buyers want to offer one dashboard where their suppliers can track an invoice to get updates and information about payment. They want systems that can integrate that dashboard along with credit card processing and virtual card issuer processing.
Virtual Card Processing
Companies in all industries are exploring virtual card processing for payments on the Internet or via telephone, fax or mail. Virtual cards offer controls similar to paper check systems, plus anonymity for the customer.
Virtual card processing needs to be flexible to allow companies to take advantage of single-use cards where they can control the amounts, expiration dates and other conditions. Suppliers like virtual cards because they can usually get paid more quickly.
A pseudo virtual card, also known as a third-party virtual card or an authorization-only virtual card, offers the benefit of assigning a specific credit card number for authorizations without generating a physical card. Cardless account numbers can also be issued as lodge cards. Suppliers like these types of cards because they restrict buyers to a set credit limit, although they can be used more than once.
As members of Generation X and Millennials move into higher-level positions, mobility becomes more and more important. Many business applications, such as customer relationship management, are now mobile by default. In addition, managers don’t even need to be in the office to use the telephone when they have business Voice over internet Protocol, or VoIP, systems. Professionals on both the supplier and buyer sides will demand the same type of flexibility for their virtual payment processing systems.
Will the Future of B2B Payments Processing Be Virtual?
Technology is moving to address the issues buyers and suppliers still face. There are so many benefits that it will be difficult not to make the change. Buyers will see significant savings, increased efficiency and more security. Suppliers will see faster payments and reduced costs.
To learn more about virtual B2B vendor payments, talk to the experts at Acom Solutions. Contact us at 800-699-5758, or online