An electronic payment, also known as an e-payment, is a payment made or accepted online. Buyers can make these electronic payments with credit cards, debit cards, electronic checks, and virtual cards. For companies and suppliers, business-to-business (B2B) e-payments are beneficial in several ways. One of the benefits for a company that incorporates e-payments is lower transaction processing costs. Processing costs can be lowered by as much as 80 percent because companies do not have to use paper, postage, printing, and mailing services. Another non-monetary impact of electronic payments is an improved relationship between a company and its suppliers. This is due to faster payments to suppliers, more secure payments, and ready data to help suppliers perform payment reconciliation.

1. Introduction to B2B Electronic Payments
Griffin McGahey

2. Introduction
An electronic payment, also known as an e-payment, is a payment made or accepted
online. Buyers can make these electronic payments with credit cards, debit cards,
electronic checks, and virtual cards.

3. For companies and suppliers, business-to-business (B2B) e-payments are beneficial in
several ways. One of the benefits for a company that incorporates e-payments is lower
transaction processing costs. Processing costs can be lowered by as much as 80
percent because companies do not have to use paper, postage, printing, and mailing
services.

4. Another non-monetary impact of electronic payments is an improved relationship
between a company and its suppliers. This is due to faster payments to suppliers, more
secure payments, and ready data to help suppliers perform payment reconciliation.

5. The increased security of e-payments over traditional payment methods is also a
distinct advantage. The e-payment transaction process presents opportunities for
companies to incorporate numerous protective features and controls in the payment
process for fraud protection.

6. Data errors are reduced when using e-payments because the reporting and analytics
capabilities of e-payments systems lead to easier auditing and checking of data. The
massive amount of data captured by e-payment systems also allows for better tracking
of payment information, which leads to better decisions by companies regarding
adjustments to the payment process.

7. The different types of e-payments have a number of advantages and disadvantages.
One popular payment type is the credit card, a revolving credit line that works with
merchant accounts and payment gateways. A merchant account is a holding area for
money received by a company before the money is disbursed to individual bank
accounts, while a payment gateway is a link or bridge between a company and a
merchant account. Companies are increasingly accepting payment via credit card
because of the inherent convenience, security, and speed of these transactions.
However, a disadvantage of accepting credit card payments is the fee charged by credit
card companies to merchants. This fee ranges from 2 percent to over 4 percent.

8. Another popular form of e-payment is a bank transfer. A company provides its suppliers
and customers with a reference number and the supplier or customer uses this
information with their bank routing and account numbers to facilitate the payment. A
clearinghouse is used for payment processing when funds move between different
banks.

9. Bank transfer payments have two advantages. First, fees are relatively low (with one
exception, which is wire transfers). The second advantage lies in the fact that a bank
account has to have an adequate balance before transfer payments can be made. This
means that transfer payments are guaranteed to be fully funded, unlike check
payments, which can bounce.

10. If a bank transfer is a wire transfer, the fee may be prohibitive. Another disadvantage is
the time it takes to use an automated clearing house (ACH). Transactions going
through a clearinghouse may take 3 to 5 days before they clear.

11. Digital wallets are increasingly becoming popular as a form of payment. A digital wallet
is software that incorporates credit card or debit card numbers, as well as other
information such as loyalty card numbers, store IDs, and transit ticket numbers. Digital
wallets give users additional capabilities, such as the ability to make peer-to-peer
payments and receive coupons.

12. B2B businesses are advised to incorporate digital wallets as a mode of payment
because the popularity of this type of payment is only expected to increase. From the
buyer side of the B2B equation, buyers are advised to first inquire whether their vendors
are able to accept such payments and to take time to understand the reconciliation
process involved with digital wallets.