While many companies have the technology in place to handle electronic payments, the majority of business deals still depend on paper checks. But that may be changing as enterprises look to overhaul inefficient financial processes, industry watchers say.
Research released Wednesday by MasterCard International and software maker Ariba predicts an up-tick in adoption of electronic payment technologies. The vendors surveyed 105 purchasing professionals in US companies with at least US$500 million revenue.
They found many companies already can handle electronic payments through e-business systems such as electronic data interchange (EDI). Two-thirds of survey respondents use some form of Electronic Invoicing Presentment and Payment (EIPP) technology to streamline their financial management processes. Of those, 62 percent use EIPP technology to make electronic payments to their suppliers, and 35 percent use the technology to receive payments from customers.
Nonetheless, the bulk of transactions use paper checks. Among this year's estimated 9.6 billion business-to-business (B2B) transactions, 80 percent will be done with a paper check, according to Alenka Grealish, an analyst at research firm Celent Communications.
"Although paper checks continue to be the dominant payment method for B2B transactions today, the opportunity for electronic payments to displace paper is enormous," Grealish said in a statement. Grealish expects that electronic B2B payments will grow from 20 percent today to almost 50 percent by 2010.
In the MasterCard-Ariba survey, 69 percent of companies that don't currently have EIPP systems reported plans for a future deployment, most within two years.
Time and money are driving this EIPP adoption: 51 percent of survey respondents cited the reduced processing time and resulting lower costs as the primary benefits of using EIPP. However barriers to its adoption still persist. Respondents cited cost (25 percent), complexity (22 percent), and aversion to making changes to their IT systems (19 percent) as the top reasons for not deploying an EIPP system.