ACH leads the pack as B2B payments evolve online

Among the payment methods that have become more frequently used due to digitization, Automated Clearing House (ACH) transfers are leading the pack.

Sixty-four percent of chief financial officers (CFOs) say this type of payment is being used more frequently, according to the B2B Digital Payments Tracker, a collaboration between PYMNTS and American Express.

Get the report: B2B Digital Payments Tracker

Other payment types that more than half of CFOs say are used more frequently include PayPal (64%), credit cards (64%), wire transfers (57%), electronic payments with virtual cards (55%) and real-time payments. (52%).

Businesses have become more comfortable with digital purchases as more and more of their business-to-business (B2B) partners close their physical doors and move their operations online. Businesses have long been familiar with debit and credit card transactions, but new, more secure electronic payment options are making waves in the space.

Get away from checks

The B2B payments mix continues to move away from checks, creating an increasing number of opportunities to innovate on top of existing and evolving payment rails for buyers and suppliers, Trina Dutta, Vice President and General Manager, B2B Payments Automation, Global Business Services at American Express, PYMNTS said in a recent interview.

“By leveraging the data that traverses B2B transaction networks,” Dutta said, “we can begin to help suppliers get the most out of their business relationships, specifically how and when they receive payments.”

Read more: Digital innovations improve B2B buyer-supplier interactions

B2B executives expressed growing confidence in electronic payment methods, with nearly half citing efficiency as a driver of their adoption of new automated payment solutions.

While ACH remains the most sought-after electronic payment processing tool, 28% of business owners also plan to invest in virtual cards soon. Such investments can help Accounts Payable (AP) departments ensure their vendors are paid in a timely manner despite pandemic-related operational setbacks.

Reinventing B2B invoicing and payments

Data from PYMNTS shows that the pandemic has been a key factor in reinventing B2B invoicing and payments. B2B companies have historically relied on outdated and inefficient paper processes, especially checks.

However, digitization has led them to integrate or increase their use of electronic and digital means of payment. Forty percent of CEOs say their use of checks has become less frequent since digitization.

Yet supplier payments remain a major problem for B2B companies, especially those that still use time-consuming, inefficient, and often error-prone manual processes. A quarter of accounts payable professionals say manual administration hurts their relationships with third-party vendors, but nearly 25% of all B2B payments are still made with paper checks.

Meet supplier payment expectations

The pandemic thrust virtual channels into the spotlight as consumers around the world migrated online during shutdowns and operational restrictions. This digital shift has highlighted the many conveniences of e-commerce transactions, driving permanent behavioral changes among merchants and consumers.

Today, most B2B buyers expect to be able to pay for their purchases online and demand multiple payment options.

A significant portion of organizations continue to forgo digital payment methods, but a growing number of businesses are leaning favorably toward digital options that could help them better meet their vendors’ payment expectations.

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NEW PYMNTS DATA: THE TRUTH ABOUT BNPL AND STORED CARDS – APRIL 2022

On: Shoppers who have store cards use them for 87% of all eligible purchases – but that doesn’t mean retailers should start buy now, pay later (BNPL) options at checkout. The Truth About BNPL and Store Cards, a collaboration between PYMNTS and PayPal, surveys 2,161 consumers to find out why providing both BNPL and Store Cards is key to helping merchants maximize conversion.