As technology continues to advance, there is a desire among both consumers and businesses to embrace modern, electronic payments. However, despite this desire and push for electronic payments, many businesses still send supporting payment information via dated, manual processes. The Federal Reserve and industry organizations like the Business Payments Coalition (BPC) are working to establish a standard, streamlined way for businesses to send electronic invoices (e-invoices), payment and remittance (e-remittance) information to one another.
One of the greatest challenges for businesses to adopt electronic payments in the United States is obtaining electronic payment information from the business they need to pay. When one business needs to pay another, they’re tasked with acquiring the electronic payment account information, which is a necessary first step to set up an electronic payment.
As B2B payment processes modernize, the ability to securely send this electronic payment information with an e-invoice will be a key enabler of efficient electronic payments.
Typically, electronic payment account information is not provided with an invoice, and as there is no best practice for providing it, obtaining this information can be both costly and prone to fraud, which further complicates payment set up. However, including the account information with the e-invoice can make it easier for business trading partners to readily have the necessary information to set up electronic payments. When doing so, businesses should continue to follow best practices to promote security.
There have been attempts to establish one centralized directory with this information in the past; however, a lack of coordinated industry efforts has resulted in no agreed-upon standards for exchanging electronic payment information supporting B2B payments. Identifying a path to safely send payment information with an e-invoice may eliminate the need for B2B payment directories and make it easier for businesses to set up and exchange electronic payments. In addition, securely sending payment information with an e-invoice can reduce check usage, manual effort, and the risk of fraud.
There are new developments in the industry that may lead to the ability to safely send payment information with an e-invoice. The first is an e-invoice exchange framework, which is a set of standards, policies and guidelines enabling businesses to connect once, and exchange with anyone on the exchange network, independent of their platform, system or application. The E-invoice Exchange Market Pilot is currently working to advance the development, testing, implementation and interim oversight of the U.S. e-invoice exchange framework. Once established, likely in 2023, it will facilitate the safe exchange of electronic payment information along with the e-invoice. Another development that will allow for the safe exchange of electronic payment information are instant payment systems. The progress and momentum of these developments is promising as they will help drive migration from check to electronic payments.
The payments industry is focused on modernization efforts to address how to securely send payment information between businesses, including electronic payment account information with e-invoices. By leveraging electronic payment processes, businesses of all types will benefit and gain great efficiency in the exchange of B2B payments.
For more information and to stay informed of industry progress, Join the FedPayments Improvement Community (select “E-invoicing” and “Electronic Payments and Remittance” under the interest preferences). Follow FedPayments Improvement on LinkedIn (Off-site) and Twitter (Off-site).