Electronic Remittance Information

A key step toward modernizing business-to-business (B2B) payments involves achieving widespread adoption for businesses to exchange electronic remittance (e-remittance) information – or details about a payment – with each other. This is a challenge as remittance information is often sent in an unstructured format and is detached from the delivery of the payment.

The Federal Reserve is collaborating with the industry, including the Business Payments Coalition (BPC) (Off-site), to enable the widespread exchange of e-remittance information between businesses.

An image of a digital network emerges on a mobile phone

Until now, the retrieval of remittance information has been a largely manual process. However, momentum is building to solve this issue, promote adoption of e-remittance data and modernize the B2B exchange of information. Service providers, payment networks, industry organizations and financial institutions can amplify this momentum by getting involved in new initiatives (Off-site) aimed at replicating the collaboration on e-invoicing to design industry solutions for e-remittance information.

While the remittance solutions landscape is still evolving, e-remittance capabilities play a strong role in reducing payment application costs and improving overall efficiency. All companies, regardless of size, can benefit from the modernization of remittance information to help reduce payment application costs and improve efficiency.

One of the key steps to achieving ubiquitous B2B electronic payments in the United States is establishing a standard way to send electronic invoices (e-invoices) and e-remittance data between businesses. An exchange framework, imagined by the BPC, is a way to do just that. This framework allows for improved payments efficiency by transforming processing of B2B payments from a fragmented, multi-step process to an automated one that, ideally, achieves straight-through-processing. The infographic below details how exchange frameworks allow for the widespread exchange of e-invoice and remittance data.

Payment Processing

Progress Towards E-Remittance Exchange

Many organizations are currently involved in advancing e-remittance capabilities. In early 2022, the Accredited Standards Committee X9’s ISO 20022 Market Practices Forum released the ISO 20022 Remittance Content Market Guide to clarify what ISO 20022 remittance information to use with B2B payments. Read more about what’s included in the guide, why it matters and how this guide will further advance straight-through processing for B2B payments.

In 2022, industry participants of the Fed and BPC’s Remittance Delivery Assessment Work Group found it feasible to establish a remittance exchange framework, similar to the e-invoice exchange framework. Then, in 2023, the work group demonstrated it is operationally feasible for an exchange framework to deliver e-remittance information, and enable straight-through processing, regardless of accounting system used. This is a major breakthrough as it moves the industry closer to a completely automated payments process from start to finish.

Building upon this success, in September 2023, the BPC with support from the Fed launched an E-remittance Exchange Pilot. Pilot participants from across the industry are coming together to test an exchange framework ecosystem that will enable all kinds of businesses to exchange e-remittance information. This phase will run through mid-2024 and is the final step before market adoption of an exchange framework for e-remittance information. To learn more about this work, contact the BPC at business.payments.smb@mpls.org.