Four Barriers to E-Payments Adoption (and How Virtual Cards Overcome)

Although check use continues to decline, many paper based processes are still in place within an organization. From paper and PDF-based invoices to manual reconciliations, many organizations are still being held back by the slow, costly processes. However, looking deeper, the concerns appear more often on the supplier side than that of the buyer.

This according to Ardent Partners’ annual report into the state of business-to-business (“B2B”) payments, called “The State of B2B Payments 2015: Emerging Business Value,” which found that aside from integration concerns, the four most common obstacles to e-payments are on the supplier side.

Four Perceived Supplier Concerns Regarding E-Payments

Suppliers yet to accept e-payments do have worries, and the four biggest perceived issues are as follows.

• Supplier does not possess technology/resources to participate (42%): The simple reality is that paper checks are still valid as a payment method, especially in North America, so a small or mid-sized supplier may not see a need to transition to a new technology. Since suppliers can receive a paper payment no matter what, investing in new technology, or hiring someone to take on new AP work, may not be a high priority.
• Difficulty convincing suppliers to accept ePayments (27%): An unequal technology footing plays a strong role in this particular barrier. Without the appropriate technology, it is hard for a supplier to see the benefits of receiving payment electronically—educating suppliers of these advantages can be a lengthy process, but it is one that both sides can leverage for mutual success in the long term.
• Obtaining and maintaining a supplier’s banking information (24%): Suppliers are understandably hesitant to share their bank account details with customers, especially in light of numerous high-profile hacks of enterprise data over the past 15 years. One of the best ways to conquer this particular issue is through using a third party that has extensive financial services experience, and the security to go along with it, as a less risky way to manage supplier account information.
• Costs borne by the supplier (23%): Costs that the supplier bears are not merely the hard costs such as money spent on a new system and so forth. There is also an opportunity cost to consider: what if the supplier spends a significant amount of capital to accept a payment for one client, and then that client, which was the only one using the new payment method, cancels their contract?

While the idea of e-payments may seem foreign to a supplier, there is an easier option that nearly every supplier already understands, accepts, and processes (even if they don’t know it yet): Virtual Cards.

Processed like a credit card, the virtual card is a one-time use card that can overcome the perceived issues that suppliers have with e-payments while providing you the visibility, security, and transparency needed.

How Virtual Cards Can Quell Supplier Qualms

Although it is no lie that suppliers often have concerns about e-payments, creating a dialogue focused on education and enablement can help suppliers to ‘come around’ to accepting a ‘new’ form of payment.

In a recent article on the WEX blog, we shared a brief guide focused on getting suppliers to love virtual cards:

• With Virtual Cards, suppliers already accepting credit cards have no new processes to adopt. By generating a one-time credit card number tied directly to the charge, suppliers get exactly the amount of money requested and purchasers get the control and visibility they need.
• Due to the one-time nature of a virtual card, processing is more secure. When it comes to data security, there’s an inherent comfort in the credit card network virtual cards use for processing. Unlike check and wire payments, virtual payments do not require bank account information. This means sensitive information is more secure and less likely to be stolen or lost.
• Suppliers can be paid without even invoicing. The built-in controls make it possible for suppliers to initiate payments without the need to send invoices.
• Faster Receipt of Payments. By accepting virtual cards, one of the most important aspects that suppliers ignore is that they will be paid faster, leading to improved cash flow at a lower cost than wire or ACH transactions.
• A Better International Payment. Virtual cards are settled in the currency of the recipient, leading an easier international payment at a lower cost.

For even more ways to overcome supplier concerns, read “5 Things You Didn’t Know about Virtual Payments” and “Five Reasons Suppliers Love to Receive Virtual Payments.”