Even as New Biz Payments Choices Emerge, ACH Still Leads the Pack

Among the payment methods that have become more frequently used due to digitization, automated clearing house (ACH) transfers lead the pack. 

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

Get the report: B2B Digital Payments Tracker

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

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

Shifting Away From Checks 

The mix of B2B payments continues to shift away from checks, creating a growing number of opportunities to innovate on top of existing and evolving payment rails for buyers and suppliers, Trina Dutta, V.P. and general manager, B2B payments automation, global commercial services at American Express, told PYMNTS in a recent interview. 

“By tapping into the data that crosses B2B transaction networks,” Dutta said, “we can start to help suppliers get more out of their trading relationships — especially how and when they receive payments.” 

Read more: Digital Innovations Improve B2B Buyer-Supplier Interactions 

B2B executives have expressed growing confidence in electronic payment methods, with nearly half citing efficiency as the driving force behind their adoption of new automated payments solutions. 

While ACH remains the most sought-after electronic payment processing tool, 28% of company leaders 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 hiccups. 

Reinventing B2B Invoicing and Payments 

PYMNTS’ data shows that the pandemic has been a key factor in the reinvention of B2B invoicing and payments. B2B businesses historically have relied on outdated and inefficient paper-based processes, especially checks. 

Digitization has led them to integrate or increase their use of electronic and digital payment methods, however. Forty percent of CEOs say their check usage has become less frequent since digitization. 

Still, vendor payments remain a major pain point for B2B companies, especially for those still using time-sensitive, inefficient and often error-prone manual processes. One-quarter of AP professionals report that manual administration hurts their relationships with third-party vendors, yet nearly 25% of all B2B payments are still being made with paper checks. 

Meeting Vendors’ Payment Expectations 

The pandemic thrust virtual channels into the spotlight as consumers all over the world migrated online during shutdowns and operational restrictions. This digital shift has highlighted the many conveniences of eCommerce transactions, leading to permanent behavioral changes among merchants and consumers alike. 

Today, most B2B buyers expect the ability to pay for their purchases online and demand several payment options. 

A significant portion of organizations continue to forego 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.