lllllll l llllllllllll l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l lllllllllllllll

2013 AFP
Electronic Payments Survey
Report of Survey Results

Underwritten by

2004 2013

HIGHLIGHTS
Of Survey Results

50
%
81
%
48
%

of B2B Payments are made

with checks

of B2B Payments are made

with checks

of organizations are likely to

convert a majority of B2B
payments made to major
suppliers from checks to
electronic payments in the
next 3 years

57
%
74
%
55

of organizations cite cost savings

as a top benefit of transitioning to
electronic payments

of organizations deliver ACH

remittance information via email

of organizations either currently use or

will start using in the next 3 years
mobile systems to approve payments

2013 AFP
Electronic Payments Survey
Report of Survey Results
November 2013

Underwritten by

Association for Financial Professionals

4520 East-West Highway, Suite 750
Bethesda, MD 20814
Phone 301.907.2862
Fax 301.907.2864
www.AFPonline.org

It is my pleasure to introduce the 2013 AFP Electronic Payments Survey, which J.P. Morgan is proud
to sponsor. We will continue working as your advocate in our mission to help drive the industry toward
greater payments efficiency.
While this years survey outlines new and encouraging payment trends, it helps us affirm crucial
constraints practitioners face when attempting to adopt these trends.
More than 70% of organizations are struggling to convert to electronic
payments, citing customer/supplier hesitance to adopt and IT barriers as major obstacles.
Only 11% of organizations today use mobile technology to initiate payments, with only 32%
planning to do so over the next three years.
50% of organizations that facilitate cross-currency payments via foreign currency
accounts also rely on banking providers, which leads to unnecessary banking
relationships and cost.
Practitioners can overcome these challenges and break through the status quo of limited electronic
payment adoption by greasing the organizational rails with a multi-year business case that includes
fee reductions, internal efficiencies, working capital optimization, enhanced forecasting, fraud
exposure reductions, improved disaster recovery, and the strengthening of data privacy. The
strongest cases will align the vision and approach of internal technology and banking partners to
capitalize on emerging electronic payment trends:
Mobile and email technology is transforming paper-based A/P and A/R processes as more
organizations are leveraging electronic payments and mobile check deposit.
Electronic reconciliation of remittance information is being readily incorporated into
accounting systems, enabling an increase in straight-through processing.
Vendors and customers can be motivated to adopt electronic payment methods through fee
reductions and other rewards.
As you read through this report, I encourage you to evaluate where your organization excels
and where there is opportunity, and then talk to us about how to best proceed. Supported by
J.P. Morgans continual commitment to delivering world-class solutions, organizations that
embrace these learnings and adopt change are well positioned to achieve renewed growth,
improved fraud control and efficiency gains.

Sincerely,
Diane Quinn
Managing Director, Treasury Services
Global Large Corporate Sales Executive
J.P. Morgan

2013 AFP Electronic Payments Survey

llll l llllllll Introduction

Payment methods are going through an unprecedented period of change. Despite the
continued decline in their use, paper checks remain the dominant payment method.
At the same time, ACH and wire payments are gaining ground but at a somewhat
slower rate than in the recent past. One reason for this could be that the check itself
is evolving: paper checks are being electronified, either through check imaging or
via conversion to ACH debits. In addition, the use of mobile payments is becoming
increasingly popular. The result of these trends is that U.S. businesses have an
expanding range of payment choices as they migrate from paper to electronic methods.
To gauge the extent to which and the ways in which treasury and finance professionals are
taking advantage of payments innovations to accommodate the pace of change in the
complex business-to-business environment, the Association for Financial
Professionals (AFP) conducted a survey of its members in September 2013. The
2013 AFP Electronic Payments Survey was designed to identify changes in U.S. business
payments practices since AFPs previous electronic payments survey in 2010, including
the drivers of change, the benefits gained, and the barriers to realizing a more
electronic payments future. Given the dynamic payments landscape, AFP expanded
the scope of this years survey and included more questions about wire transfers,
certain regulations impacting electronic payments, electronic check-processing,
cross-border transactions, and relatively new and emerging payment innovations such
as mobile payments. The survey results highlight trends, identify best practices and
reveal solutions for advancing automation of business-to-business payments.
In September 2013, the Research Department of the Association for Financial
Professionals sent a 35-question survey to its corporate practitioner members with the
following job titles: cash manager, director, analyst and assistant treasurer. The survey
generated a total of 484 responses, which are the basis of this report. AFP thanks
J. P. Morgan for underwriting the 2013 AFP Electronic Payments Survey. The Research
Department of the Association for Financial Professionals, which designed the survey
questionnaire, analyzed the survey results and wrote/edited the report, is solely
responsible for the content of this report.

www.AFPonline.org

2013 Association for Financial Professionals, Inc. All Rights Reserved

2013 AFP Electronic Payments Survey

ll ll l llllllll Highlights of Survey Results

The key findings of the 2013 AFP Electronic Payments Survey include:
The use of paper checks to make and receive business-to-business (B2B)
payments continues to decline.
- The typical organization makes 50 percent of its B2B payments by
check, down from 74 percent in 2007 and 57 percent in 2010.
For payments to major suppliers, organizations make an average of
43 percent of their payments by check, 31 percent by ACH credit and
16 percent by wire transfer.
One in five organizations makes a majority of their payments through
electronic means. Just under half of survey respondents indicate that
their organizations are very likely to convert the majority of their B2B
payments to major suppliers from checks to electronic payments in the
next three years.
- The typical organization receives 50 percent of its B2B payments
by check.
Forty-two percent of payments from major customers are by check.

B2B Payments Made with Checks

21%

20%

B2B Payments Received with Checks

20% or less

21%

20%

21-40%

21-40%

41-60%

21%

21%
17%

61-80%

20% or less

41-60%

21%

21%

81-100%

2013 Association for Financial Professionals, Inc. All Rights Reserved

17%

61-80%
81-100%

www.AFPonline.org

2013 AFP Electronic Payments Survey

Among organizations that make payments across country borders using

multiple currencies, the most widely used payment method is wire transfers
(65 percent of transactions)
- Contractual requirements and the size/type of transaction are key
considerations in an organizations decision about which payment
method to use when making cross-currency payments.
Financial professionals cite a number of benefits from their organizations
increased use of electronic payments:
- Cost savings (cited by 57 percent of survey respondents)
- Improved cash forecasting (46 percent)
- Fraud control (39 percent)
- More efficient reconciliation (37 percent)
The top barriers to the adoption of electronic payments are:
- Difficulty convincing customers to pay electronically
(cited by 82 percent of survey respondents)
- Difficulty convincing suppliers to accept electronic payments
(74 percent)
- Shortage of IT resources for implementation (71 percent)
- Lack of standard format for remittance information (70 percent)
- Lack of integration between electronic payment and account systems
(66 percent)
Email is the delivery method most likely used to deliver and receive
remittance information tied to organizations ACH payments. Other
communication methods include:
- EDI/CTX transmission (37 percent to send, 44 percent to receive)
- Mail (18 percent to send, 21 percent to receive)
- Fax (15 percent to send, 22 percent to receive)
Organizations are more likely to have integrated their accounting systems
with their ACH payment systems than with their card systems.
- Seventy-eight percent of organizations have integrated their
ACH systems while 56 percent have done so for card payments.
For ACH payments, 73 percent of organizations have integrated their
A/P systems while 50 percent have integrated their A/R systems.
For card payments, 50 percent of organizations have integrated their A/P
systems and 34 percent have integrated A/R.
- While a relatively small share of organizations currently uses mobile
payments, a number of companies are evaluating increasing their use
of mobile tools for payments within the next three years in the
following areas:
Review payments sent or received (cited by 37 percent of respondents)
Review balance and other payment information (37 percent)
Approve payments (36 percent)

www.AFPonline.org

2013 Association for Financial Professionals, Inc. All Rights Reserved

2013 AFP Electronic Payments Survey

llll l llllllll Survey Findings

Check Usage in Business-to-Business (B2B)
Disbursements and Collections
Disbursements
Half of organizations business-to-business (B2B) payments continue to
be made by check, although the share of such check payments continues
to decline. Currently, the typical organization makes 50 percent of its B2B
payments by check. The use of B2B payments via checks has been declining
steadily since 2004.
Use of Checks

(Mean Percentage of B2B Payments Made by Organizations)

90%
80%
81%

70%

74%

60%
50%

57%

40%

50%

30%
20%
10%
0%

2004

2007

2010

2013

2013 Association for Financial Professionals, Inc. All Rights Reserved

www.AFPonline.org

2013 AFP Electronic Payments Survey

Furthermore, the percentage of organizations that rely on checks for over 60

percent of their payments also declinedfrom 75 percent in 2004 to 41 percent in
2013. On the other hand, the percentage of organizations reporting lower check
volumesthat is, checks represent less than 40 percent of B2B paymentsrose
from 13 percent to 41 percent during the same time frame.
Large organizationsthose with annual revenues of at least $1 billionuse checks
for a smaller share of their B2B payments than do organizations with annual revenues
under $1 billion. In the typical large organization, 40 percent of its B2B payments are
by check compared to 63 percent of such payments in the typical smaller organization.
While half of organizations with annual revenues of at least $1 billion use checks for
40 percent or less of their B2B payments, only 34 percent of organizations with annual
revenues under $1 billion do the same. About one out of three smaller organizations
use checks for at least 81 percent of their transactions compared to just 14 percent of
larger organizations that do so.

Percentage of Organizations B2B Payments Made by Check

(Percentage Distribution)

All

Respondents
20% or less

20%

Revenues
Under
$1 Billion

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

17%

24%

20%

28%

21-40%

21 17 26 19

28

41-60%

17 16 17 21

17

61-80%

21 22 19 23

15

81-100%

21 28 14 17

12

Median

www.AFPonline.org

50% 63% 40% 50%

2013 Association for Financial Professionals, Inc. All Rights Reserved

37%

2013 AFP Electronic Payments Survey

Collections
The use of checks for payments to an organization from its business customers
is also declining. Overall, the typical organization currently receives 50 percent
of its B2B payments by check compared to 54 percent in 2010 and well below
the 75 percent reported the 2004 AFP survey.
Use of Checks for Collections

(Mean Percentage of B2B Payments Received by Organizations)

80%
70%

75%

60%

64%

50%

54%
50%

40%
30%
20%
10%
0%

2004

2007

2010

2013

The percentage of organizations collecting over 60 percent of their payments

by check declined from 69 percent reported in the 2004 survey to 35 percent in
2013. At the same time, the percentage of organizations at which checks represent 40 percent or less of B2B customer payments has increased from 20 percent
in 2004 to 44 percent in 2013.
Percentage of Organizations B2B Payments Received by Check
(Percentage Distribution)

All

Respondents
20% or less

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

19%

29%

23%

24%

21-40%

20 18 22 18

37

41-60%

22 26 18 28

22

61-80%

21 23 20 23

16

81-100%

14 14 12

11

Median

24%

Revenues
Under
$1 Billion

50% 50% 40% 50%

2013 Association for Financial Professionals, Inc. All Rights Reserved

40%

www.AFPonline.org

2013 AFP Electronic Payments Survey

lllllllllllll
B2B Payment Methods
The use of electronic payment methods is more likely to have increased in transactions with organizations major vendors and customers. Still, checks remain
the most popular payment method in transactions with major trading partners.

B2B Disbursements: Major suppliers

The vast majority of organizations (92 percent) still utilize checks when paying
at least some of their major vendors/suppliers. At the same time, they rely on
a full range of electronic payment methods to reimburse vendors. Eighty-two
percent of organizations use wire transfers to pay major suppliers, 81 percent use
ACH credits, 50 percent use purchasing cards, 34 percent use ACH debits and
13 percent use single-use accounts.
While checks continue to be the most widely used method of payment to major suppliers, their usage has declined significantly in recent years. The average
company makes an estimated 43 percent of its payments to major suppliers by
check. In the 2010 and 2007 surveys, the shares were 49 percent and 65 percent, respectively. Thirty-one percent of payments made to major suppliers are
made using ACH credits while 16 percent are made via wire transfer. Purchasing cards, ACH debits and single-use accounts are used for far fewer payments
to major customers.
Payment Method Used to Pay Major Suppliers
(Mean Distribution)

2% 1% 2%
Checks

5%

ACH credits

16%

Wire transfers

43%

Purchasing cards
ACH debits
Single-use accounts

31%

www.AFPonline.org

Other

2013 Association for Financial Professionals, Inc. All Rights Reserved

2013 AFP Electronic Payments Survey

Larger organizations are more likely than smaller ones to use ACH credits
to pay major suppliers. Consequently, their percentage of check payments is
smaller. The share of ACH credits in a large organizations payments mix is a
third greater than that in smaller organizations (38 percent versus 27 percent).
Payment Method Used to Pay Major Suppliers
(Mean Distribution)

All

Respondents

Revenues
Under
$1 Billion

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

2010 Survey
All
Respondents

Checks
43%

48%

37%

42%

42%

49%

ACH credits
31

27

38

30

35

26

Wire transfers
16

15

16

19

12

17

Purchasing cards
5

ACH debits
2

Single-use accounts
1

Other
2

#-This response was not an option in the 2010 survey

2013 Association for Financial Professionals, Inc. All Rights Reserved

www.AFPonline.org

2013 AFP Electronic Payments Survey

B2B Collections: Major business customers

An overwhelming majority of organizations (93 percent) receive checks from
their major business partners. But their B2B customers also utilize the full
range of electronic payments. Eighty-one percent of organizations receive
payments from major customers via ACH credits, 75 percent collect via wire
transfers, 22 percent are paid through ACH debits, 20 percent receive purchasing card payments and six percent are paid via a single-use account.
Forty-two percent of all payments made by major business customers still involve checks. But the use of checks for such payments has declined. Forty-seven
percent of payments that organizations received from major customers in 2010
were in the form of checksitself a decline from the 57 percent in 2007.
The typical organization also collects 26 percent of its payments from major
customers through ACH credit, 20 percent via wire transfer, four percent by ACH
debit, two percent by purchasing card and one percent by single-use accounts.
Payment Method Used by Major Suppliers when Paying Organizations
(Mean Distribution)

1%
2%
4%

5%
Checks
ACH credits
Wire transfers

20%

42%

Purchasing cards
ACH debits

26%

www.AFPonline.org

Single-use accounts
Other

2013 Association for Financial Professionals, Inc. All Rights Reserved

2013 AFP Electronic Payments Survey

Larger organizations are less likely than smaller ones to receive payments via
checks. Organizations with annual revenues of at least $1 billion receive only
38 percent of their payments from major customers by check compared to the
47 percent of payments to smaller organizations by check. On the other hand,
large organizations are slightly more likely than smaller ones to be paid via ACH
credits from major B2B customers (31 percent of payments versus 25 percent
of payments).
Payment Methods Used by Major Business Customers
(Mean Distribution)

All

Respondents

Revenues
Under
$1 Billion

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

2010 Survey
All
Respondents

Checks
42%

47%

38%

41%

42%

47%

ACH credits
26

25

31

29

28

26

Wire transfers
20

19

20

21

18

19

ACH debits
4

Purchasing cards
2

Single use accounts

1

Other
5

#-This response was not an option in the 2010 survey

* - less than one percent

10

2013 Association for Financial Professionals, Inc. All Rights Reserved

www.AFPonline.org

2013 AFP Electronic Payments Survey

Straight-Through Processing (STP)

By using straight-through processing (STP) a payment transaction can be
conducted without manual intervention. That means a payment can be initiated electronically through an organizations Accounts Payable system (AP),
electronically transferred from one party to another where it is automatically
received and booked by the Accounts Receivables system (AR) without the need
for manually re-entering the same data repeatedly.
Half of the survey respondents indicate that their organizations use straightthrough processing to handle at least some of their payments. Among those
organizations that use straight-through processing, 32 percent of their payments
are handled through the process.
Use of Straight-Through Processing for Payments
(Percentage Distribution)

All

Respondents
None

Revenues
Under
$1 Billion

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

50% 58% 41% 52%

41%

1-20 percent

21

19

25

24

23

21-40 percent

41-60 percent

13

61-80 percent

More than 80 percent

11

11

www.AFPonline.org

2013 Association for Financial Professionals, Inc. All Rights Reserved

11

2013 AFP Electronic Payments Survey

llll l llllllll
Future B2B Use of Electronic Payments
Organizations expect to continue increasing their use of electronic payments
over the coming years. Nineteen percent of organizations currently make a
majority of their payments to major suppliers using something other than a
check (an increase from the 13 percent reported in 2010). Just under half of
survey respondents believe their organizations will convert the majority of their
B2B payments to electronic methods for their major suppliers within the next
three years. Another 25 percent indicate that it is somewhat likely that their
organizations, too, would move toward electronic methods for at least half of
their payments to major suppliers over the next three years.
Likelihood of Converting Majority of B2B Payments to Major Suppliers From Checks
to Electronic Payments in Three Years
(Percentage Distribution)

All

Respondents

Revenues
Under
$1 Billion

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

48%

48%

49%

44%

48%

Somewhat likely

25

24

27

32

26

Not at all likely

12

10

Majority already electronic

19

16

21

14

23

Very likely

12

2013 Association for Financial Professionals, Inc. All Rights Reserved

www.AFPonline.org

2013 AFP Electronic Payments Survey

Financial professionals are a bit less enthusiastic about the prospects of moving
to electronic forms of payments for suppliers to which they make infrequent payments. Just over a third of survey respondents indicate that their organizations are
very likely to move a majority of their B2B payments to electronic methods over
the next three years. Only nine percent of organizations have already done so.
Likelihood of Converting Majority of B2B Payments to Other Suppliers From Checks
to Electronic Payments in Three Years
(Percentage Distribution)

9%
15%

Very likely

34%

Somewhat likely
Not at all likely
Majority already electronic

43%

These results are not surprising since for most organizations the biggest barrier to increasing electronic payments is convincing suppliers and customers to
make the switch. In addition, it is easier negotiating electronic payment options
with an organizations most frequent business partners. Another reason may be
the difficulty of simply finding the necessary financial information, such as account numbers, for infrequent business partners.
Likelihood of Converting Majority of B2B Payments to Other Suppliers From Checks
to Electronic Payments in Three Years
(Percentage Distribution)


All

Respondents

Revenues
Under
$1 Billion

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

2010 Survey
All
Respondents

Very likely
34%

30%

39%

28%

41%

35%

Somewhat likely
43

46

40

50

35

42

Not at all likely

15

16

13

15

15

15

Majority already electronic

9
8

www.AFPonline.org

2013 Association for Financial Professionals, Inc. All Rights Reserved

13

2013 AFP Electronic Payments Survey

Cross-Currency Payments
Many organizations operate globally and/or conduct business with partners,
vendors or other service providers in different countries. Consequently, many
payments are made cross-border and so involve multiple currencies. While
14 percent of organizations participating in the 2013 AFP Electronic Payments
Survey send more than 10 percent (in terms of transaction volume) of their
payments cross-border, 70 percent of organizations make at least some crosscurrency payments.
In order to make or receive cross-currency payments, organizations can use
a number of methods. In some cases, they may maintain (a) foreign currency
account(s) so they can send or receive foreign currency payments. Others choose
to partner with a bank or other provider to facilitate cross-currency payments.
Just over a half of survey respondents indicate that their organizations use a
combination of these two processes in order to make cross-currency payments.
In addition, just under a quarter of organizations have foreign currency
accounts to meet their cross-currency needs while 15 percent use a bank to
handle cross-currency payments. Nine percent of organizations make all of
their cross-border payments in U.S. dollars and leave the conversion process to
the beneficiary and/or the beneficiarys bank.
Process Used by Organizations to Make Cross-Currency Payments

(Percentage Distribution of Organizations with at Least 10 percent of Payments that are Cross-Currency)
Organization holds a foreign currency account (or accounts) and purchases foreign currency
funds in order to make payments from that currency account (or accounts)

23%

Organization uses a bank or other provider that can allow the organization to make
cross-currency payments

16

A combination of the above two processes

52

Organization sends the payment in USD and leaves the conversion process to the
beneficiary/beneficiarys bank 9

14

2013 Association for Financial Professionals, Inc. All Rights Reserved

www.AFPonline.org

2013 AFP Electronic Payments Survey

Similarly, 48 percent of organizations that receive cross-currency payments

use either a foreign currency account and/or rely on a bank to allow for the
receipt of such payments. Twenty-seven percent use foreign currency accounts
only, while 14 percent partner with banks that allow the organizations to receive
cross-currency payments (i.e., convert incoming foreign currency payments into
USD and credit an organizations USD account). Eleven percent of organizations instruct their counterparties to always send payments in U.S. dollars.
Process Used by Organizations to Receive Foreign Currency Payments

(Percentage Distribution of Organizations with at Least 10 percent of Payments that are Cross-Currency)
Organization holds a foreign currency account (or accounts) in order to receive
foreign currency funds, which the organization converts to USD

27%

Organization uses a bank or other provider that can allow the organization to receive
cross currency payments

14

A combination of the above two processes

48

Instruct all counterparties to always send payments in USD

11

Most cross-border payments are made using wire transfers. Sixty-five percent of
cross-border transaction payments are made via wire transfers. Thirteen percent of
cross-border payments are made using treasury operations that organizations have in a
local country while ten percent of payments are made utilizing cross-border ACH/IAT.
Method Used to Transact Cross-Border Payments
(Mean Distribution of Cross Border Payment Methods)

70%

65% 66%

60%

Send payments

50%

Receive payments

40%

10% 8%

5%

www.AFPonline.org

Checks

Cross-border ACH/IAT

Have treasury operations

in local countries

Wire transfers

0%

6%

3%

4%

2% 1%

1% 1%

2013 Association for Financial Professionals, Inc. All Rights Reserved

1%

4%

Other

10%

Local disbursements
(Grio, post office, etc.)

13%

10%

SEPA Payments

20%

Purchasing cards

30%

15

2013 AFP Electronic Payments Survey

There are a number of factors organizations consider when choosing a method

for cross-border payments. Thirty-one percent of survey respondents indicate that
a contractual requirement drives the choice of payment method used in an international transaction. Other survey respondents indicate that the primary factors are:
Size and purpose of transaction (cited by 24 percent of respondents)
Transaction costs (19 percent)
Currency risk (19 percent)
Primary Factor Driving Cross-Border/International Payment Format

(Percentage Distribution of Organizations with at Least 10 percent of Payments that are Cross-Currency
Contract requirement

31%

Depends on size and purpose of transaction

24

Transaction costs

19

Currency risk

19

Other 9

SEPA
Those organizations that do business in or with entities in the European Economic
Community face an additional challenge in making/receiving cross-currency payments.
The Single Euro Payment Area (SEPA) denotes the integration of the multitude of
existing national Euro credit transfer and Euro direct debit systems into a single
standardized payment system that considers all Euro payments within the SEPA as
domestic. Currently SEPA consists of the 28 Euro member states plus Iceland,
Norway, Liechtenstein, Switzerland and Monaco. The firm migration (to SEPA)
end-date is February 1 2014; afterward, all Euro payments within the Euro-denominated countries must be done as SEPA payments. A later date of 31 October 2016 has
been set for Euro payments within member countries not using the Euro. Payments
to the Single Euro Payment Area from other parts of the world are not affected by
the SEPA rules.
Sixty-two percent of survey respondents indicate that their organizations are subject
to SEPA. Of those organizations, only a quarter are currently fully compliant with
SEPA. Another 44 percent are working with their banking partners to identify a
solution while 25 percent are determining what the proper course of action should be.
Status of SEPA Compliance

(Percentage Distribution of Organizations Subject to SEPA)

Full Compliance

25%

Working with banking partners to identify a solution

44

Determining the proper course of action

25

Working with a third-party payment provider that handles the transition

Other 3

16

2013 Association for Financial Professionals, Inc. All Rights Reserved

www.AFPonline.org

2013 AFP Electronic Payments Survey

l llllllllllll
Electronic Payments: Benefits, Barriers and Trends
Benefits of Electronic Payments
As they migrate from checks to ACH, card and wire transfer payments, organizations are realizing a variety of benefits from such transition. Cost savings is
the top benefit cited by a majority of organizations adopting electronic payments: 57 percent of organizations use electronic payments in order to reduce
costs. After cost savings, improved cash forecasting (46 percent), fraud control
(39 percent) and more efficient reconciliation (37 percent) are the most often
cited benefits of transitioning to electronic payment methods. Approximately
a quarter of respondents indicate working capital, straight-through process to
A/P and A/R and better supplier/customer relations as benefits resulting from
electronic payments.
Top Benefits of Transitioning to Electronic Payments
(Percent of Organizations)

Cost savings

57%

Improved cash forecasting

46%

Fraud control

39%

More efficient reconciliation

37%
27%

Working capital improvement

Better supplier/customer relations

24%

Straight-through processing to A/P or A/

24%
20%

Reduction in days sales outstanding

16%

Ability to take payment discounts

Other

1%
0 10 20 30 40 50 60

www.AFPonline.org

2013 Association for Financial Professionals, Inc. All Rights Reserved

17

2013 AFP Electronic Payments Survey

There are few significant differences in the reporting of benefits gained in

cost-savings, improved cash forecasting, more efficient reconciliation and
straight-through processing based on size (as determined by annual revenue).
However, respondents from large organizations (those with revenues of at least
$1 billion) are more likely than those from smaller ones to indicate their companies benefit from early payment discounts and fraud control when transitioning
to electronic payments. Survey respondents from smaller organizations report
that their companies benefit more in terms of better supplier/customer relations
than do their larger counterparts.
Top Benefits of Sending or Receiving Electronic Payments
(Percent of Organizations Rating Benefit Among Their Top 3)


All

Respondents

Revenues
Under
$1 Billion

Cost savings
57%

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

2010 Survey
All
Respondents

54%

60%

42%

68%

52%

Improved cash forecasting

46
47

47

52

46

40

Fraud control
39

35

42

41

39

37

More efficient reconciliation

37
38

35

38

30

32

Working capital improvement

27
29

25

37

23

28

Straight-through processing to A/P or A/R

24
25
25

21

27

24

Better supplier/ customer relations

24
28

22

25

20

24

Reduction in days sales outstanding

20
23

19

24

18

22

Ability to take early payment discounts

16
10

19

10

24

18

Other
1

18

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2013 AFP Electronic Payments Survey

Barriers to Electronic Payments

Organizations do face some challenges when increasing their use of electronic
payments. These barriers often center on trading partner relationships, access
to IT resources, the lack of a standard format for remittance information, and
integration issues.
No single factor is considered a major barrier by a majority of survey
respondents. However, when looking at the weight of the barriers overallboth
major and minorfive factors which were selected by at least two-thirds of
respondents stand out.
1. Difficulty in convincing customers to pay electronically
(cited by 82 percent of respondents)
2. Difficulty in convincing suppliers to accept electronic payments
(74 percent)
3. Shortage of IT resources for implementation (71 percent)
4. No standard format for remittance information (70 percent)
5. Lack of integration between electronic payment and accounting systems
(66 percent).
Barriers to Increasing Use of Electronic Payments
(Percentage Distribution)

Major
Minor
Not a
Barrier Barrier Barrier

Difficult to convince customers to pay electronically

28%

54%

18%

Difficult to convince suppliers to accept electronic payments

21

53

26

Shortage of IT resources for implementation

35

36

29

No standard format for remittance information

23

47

30

Lack of integration between electronic payment and accounting systems

28

38

34

Trading partners cannot send/receive automated remittance information

with electronic payments

17

43

40

Privacy/security of bank account information

11

45

44

Check systems work well

16

38

45

Loss of check float

32

59

Organization cannot send or receive automated remittance information

with electronic payments

12

27

61

Organization needs to open/hold a current account to make and/or receive

payments in foreign currency

15

81

Banking partners that do not offer all the currencies used by the
organization to make payments

15

82

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2013 AFP Electronic Payments Survey

Trends in Sending and Receiving Remittance Information with

ACH Payments
Organizations use a variety of methods to send remittance information when sending or
receiving ACH payments. Email is the most frequently used method to send remittance
information: nearly three-quarters of organizations transmit remittance information
when making an ACH payment via email. The next most widely used method of sending
ACH remittance information is EDI/CTX transmission, used by 37 percent of organizations. Seventeen percent of organizations use regular mail while 16 percent use faxes to
send ACH remittance information to vendors.
The dominance of email as a method for sending remittance information reflects its simplicity and cost-efficiency. It is also fast. Using EDICTX may be more efficient but it is also more
complex; that may explain the lower percentage of organizations using such a method.
Organizations Method of Sending ACH Remittance Information
(Percent of Organizations)

74%

Email
37%

EDI/CTX transmission
18%

Regular mail

15%

Fax

10%

Third-party website
Organizations website

6%

Customers website

6%

Other

3%
0% 10% 20% 30% 40% 50% 60% 70% 80%

Organizations Method of Sending ACH Remittance Information

(Percent of Organizations)

All

Respondents
Email

Revenues
Under
$1 Billion

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

74% 81% 68% 70%

76%

EDI/CTX transmission

37

25

47

35

43

Regular Mail

18

16

20

18

24

Fax

15 13 17 13

26

Third-party website

10

13

19

Customers web-site

10

Organizations website

12

Other

3 2 3 3

20

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2013 AFP Electronic Payments Survey

Organizations tend to receive ACH remittance information in much the same

way as they send it. Seventy-two percent of organizations receive ACH remittance information via email with 43 percent receiving the information by EDI/
CTX transmission. Other methods used to receive ACH remittance information include:
Fax (cited by 21 percent of respondents)
Regular mail (20 percent).
Organizations Method of Receiving ACH Remittance Information
(Percent of Organizations)

Email

74%

EDI/CTX transmission

44%
22%

Fax

21%

Mail
Third-party website

15%

Customers website

15%

Organizations website

5%

Other

3%

ISO20022

3%
0% 10% 20% 30% 40% 50% 60% 70% 80%

Organizations Method of Receiving ACH Remittance Information

(Percent of Organizations)

All

Respondents
Email

Revenues
Under
$1 Billion

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

74% 76% 70% 70%

EDI/CTX transmission

44

Fax

22 21 23 20

26

Mail

21 19 23 24

15

Customers web-site

15

15

18

16

15

Third-party website

15

11

19

11

26

Organizations website

ISO20022

2 1 3 *

10

Other

3 2 4 2

www.AFPonline.org

33

54

40

74%

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21

2013 AFP Electronic Payments Survey

Trends in Integrating Electronic Payments with

Accounting Systems
Organizations continue to report progress in integrating their payment and
accounting systems, bringing with such integration cost savings and processing efficiencies. However, organizations are more likely to have integrated their
accounting systems with their ACH and paper check payment systems than
with their cards and wires systems. Eighty-five percent of organizations have
integrated their check payments systems and 78 percent of organizations have
integrated their ACH systems. By comparison, only 56 percent have done the
same for card payments or wires.
The level of accounting system integration with ACH and card payments
systems is up from previous surveys. In 2004, only 45 percent of respondents
reported that their organizations had integrated accounting systems with electronic payment systems, including 56 percent of large organizations. In 2007,
59 percent of organizations had integrated their ACH payment system with its
accounting system while 40 percent had done the same with their card system.
By 2010, the former had grown to 70 percent while the latter was at 46 percent.
Accounts payable (A/P) systems are more likely than accounts receivable (A/R)
systems to have been integrated with electronic payments. For ACH payments,
73 percent of organizations have integrated their A/P systems, compared to 50
percent that have integrated their A/R systems.
Integration of Payment Systems with Accounting Systems
(Percentage Distribution)

60%
52%

50%

45%

44%

44%

40%
34%

30%

28%

10%

Card payments

27%
23%

20%

ACH

30%
22%

20%

Checks
15%

5%

Wires

7%
2% 2%

0%

22

A/P only
A/R only

Both
A/P and A/R

Neither
are integrated

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2013 AFP Electronic Payments Survey

Accepting B2B Card Payments

Fifty-seven percent of organizations accept purchasing cards from customers
making B2B purchases and accept the cards for a number of applications.
Sixty-two percent of organizations that accept B2B card payments do so via
phone or through the web, while 54 percent do so in a point-of-sale environment.
Card Acceptance from Business Customers

(Percent of Organizations that Accept Card Payments from B2B Customers)

70%

62%

60%
50%

54%

For small dollar transactions

(office supplies and services)

75%

40%

For large dollar purchases

(>$5,000)

37%

Payment in a point-of-sale
environment

30%
19%

20%

Payment via phone or web

Payment as part of a supply
chain network services

10%
0%

Seventy-six percent of organizations use cards to handle at least part of their

employee pay, benefit or reimbursement payments. Fifty-seven percent of organizations use cards to disburse flexible spending account payments while more than
a third uses cards to make payments from health savings accounts. Thirty-one
percent use cards for gifts and/or incentive payments while a quarter of survey respondents report their organizations use cards for at least some payroll payments.
Cards Utilized to Disburse Employee Pay and Benefits
(Percent of Organizations)

All

Respondents
Flexible spending accounts

57%

Revenues
Under
$1 Billion

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

51%

63%

52%

53%

Gift/incentive

31 26 35 31

32

Health savings account

35

27

43

33

40

Payroll cards

24

17

29

23

37

Emergency use

Other

2 1 4 2

None of the above

24

19

www.AFPonline.org

35

33

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2013 AFP Electronic Payments Survey

Use of Mobile Payments

Since the 2010 survey the number of organizations using mobile payment
options has increased. Further, a growing percentage of organizations are
considering expanding their use of mobile payments over the next three years.
Survey respondents report that their organizations currently use (or plan to
use in the future) mobile payment options for the following major payment
processes:
Initiate payments11 percent of organizations currently use mobile
payment tools while another 32 percent expect to do so over the next
three years
Payment approval19 percent of organizations currently use mobile
payment tools while another 36 percent expect to do so over the next
three years
Review payments sent and/or received18 percent of organizations
currently use mobile payment tools while another 37 percent expect to do
so over the next three years
Review balance and other payment information19 percent of
organizations currently use mobile payment tools while another 37 percent
expect to do so over the next three years
Accept mobile payments from customersten percent of organizations
currently do so while another 30 percent expect to do so over the next
three years.
Organizations Plan to Implement Mobile Payments Over the Next Three Years
(Percent of Organizations)

40%

37%

36%

35%

37%

31%

30%

30%

25%

Currently use
19%

20%
15%

18%

19%

11%

Will use within 3 years

10%

10%

24

Accept mobile payments

from consumers

Review balance and other

payment information

Review payments sent

or received

Approve payments

0%

Initiate payments

5%

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2013 AFP Electronic Payments Survey

The percentage of organizations that currently use mobile options to approve

payments, review payments and review balances has more than doubled since
2010. Although still a small percentage, the share of companies that accepts
mobile payments from consumers has increased even morefrom a mere two
percent in 2010 to 10 percent in 2013.
Organizations Plan to Implement Mobile Payments Over the Next Three Years
(Percentage Distribution)


Will use

Currently use
Initiate payments

No Plan
within 3 years

Used in
to use
2010 Survey

11%

31%

58%

6%

Approve payments

19

36

45

Review payments sent or received

18

37

45

Review balance and other payment information

19

37

44

Accept mobile payments from consumers

10

30

60

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25

2013 AFP Electronic Payments Survey

lllllllllllll
Other Trends and Developments
Business-to-Consumer Payments
Three-quarters of survey respondents work for organizations that accept payments
directly from consumers. Credit cards (accepted by 51 percent of organizations),
non-converted checks (44 percent), cash (36 percent), debit cards (36 percent) and
recurring ACH debits (34 percent) are the payment methods most likely accepted from
consumers. Organizations also accept payments in the following forms:
Bill payment via organizations web site (accepted by 23 percent of organizations)
Check conversion to ACH at the lockboxARC (22 percent)
Foreign currency wires (22 percent)
Bill payment via a third-party (bank) web site (20 percent).
Payment Methods Used to Receive Payments from Consumers
(Percent of Organizations)

Revenues Revenues Less than 1,000

All
Under
at Least
B2B Payments

Respondents $1 Billion $1 Billion
made/month
My company does not receive
payments directly from consumers

Greater than 5,000

B2B Payments
made/month

24%

29%

22%

34%

16%

Credit cards

51

44

55

42

54

Checks that are not converted

44

44

44

33

52

Cash payments

36

31

38

26

47

Debit cards

36

29

42

25

44

Recurring ACH debits

34

31

36

29

38

Bill payment on my organizations web site 23

21

26

16

29

Foreign currency wires

22

24

21

24

27

Check conversion to ACH at the lockbox (ARC) 22

14

27

18

24

Bill payment on bank/third party Web site

20

18

20

14

25

Third-party POS (PayPal, Google Wallet, etc.) 15

13

16

15

19

Check conversion to ACH in the back office (BOC) 13

13

13

13

15

Check conversion to ACH at point-of-sale (POP) 11

17

21

Stored value cards

14

13

Third-party in-person payment centers

11

10

Mobile solutions (Square, Visa, ISIS, etc.)

Conversion of dishonored checks to ACH

debits (RCK)

Unstaffed bill payment kiosks for

cash and checks

Other

4 5 3

26

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2013 AFP Electronic Payments Survey

EMV
EMV stands for Europay, MasterCard and Visa and is a global, interoperable
standard for integrated chips in cards, chip cards. The EMV standard was
created to enhance security in authenticating credit and debit card transactions.
EMV chip card transactions with PIN authorization improve security against
fraud compared to magnetic strip cards that rely on the cardholders signature.
While EMV has been the standard in many parts of the world for a number of
years, its acceptance in the U.S. has been lagging. Currently there is no specific
requirement for merchants in the U.S. to implement EMV-capable point-of-sale
(POS) devices. However, in the near future liability for fraudulent transactions
will shift from the card issuer to the merchant for any transactions not made
on fully capable EMV POS devices. The time lines for this liability shift are
October 2015 for American Express, Discover, MasterCard and Visa for POS
transactions and an extended deadline of October 2017 for Automated Fuel
Dispenser (AFD) terminals. For ATM transactions the time lines are extended to
October 2016 for MasterCard and October 2017 for Visa. The shift in liability
will most likely speed up the adoption of EMV in the U.S.
Most organizations that anticipate being impacted by the EMV roadmap
75 percent have not made any preparations as a result. Only six percent of
these organizations have placed (or are in the process of placing) new terminals
in service in anticipation of EMV adoption. The remaining 19 percent of
organizations have either had preliminary conversations with their acquirer to
discuss the potential impact of the EMV roadmap or are currently considering
upgrading their terminals.
Steps Taken as a Result of the Announced EMV Implementation Roadmap
(Percentage Distribution of Organizations Anticipating Impact from the EMV Roadmap)


All

Respondents

Revenues
Under
$1 Billion

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

Organization has not made any changes as a result of the EMV roadmap

75% 82% 69% 77%

70%

Organization is working with its acquirer to under the potential impact

14 7 19 8

21

Organization is considering the implementation of new credit card terminals to allow for EMV

5 6 5 6

Organization is in process of placing (or has put in place) new terminals

6 6 7 10

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27

2013 AFP Electronic Payments Survey

Impact of Changes in USPS

Faced with mounting financial losses, the U.S. Postal Service (USPS) is considering a number of changes to and reductions in its service. In May 2012 the USPS
announced a plan to consolidate its network of mail-processing locations. This
could slow the mail and thus would affect organizations ways of conducting
paper check payments, such as the location for lockbox service providers as well
as general service level agreements. Also, a recently announced proposed postage
increase will likely have a negative impact.
One change that would no doubt have had a negative impact on organizations using paper checks was the USPSs planned elimination of Saturday street
address mail delivery. While the U.S. Congress temporary stopped the proposal,
there remains uncertainty which may affect how organizations plan for future
ways of conducting payments.
Three-quarters of organizations have not taken any steps to address expected
changes/proposed changes made to the level of service provided by the U.S.
Postal Service. Of those companies that have taken some action, the most likely
step involves encouraging their customers to shift from checks to electronic
forms of payments. The use of electronically initiated checks sent over email
may also see an upward trend.
Actions Taken as a Result of Changes (and Anticipated Changes) in the Level of Service
Provided by the U.S. Postal System
(Percent of Organizations)

All

Respondents

Revenues
Under
$1 Billion

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

Organization has not taken any actions

75% 81% 71% 79%

70%

Encouraging customers to make payments electronically

24 20 26 23

29

Conducting more mail studies and working with lockbox provider

8 3 12 6

16

Using post mark capture or intelligent mail bar core tracking

3 2 4 3

Move lockbox operations in-house

1 * 3 3

* - less than one percent

28

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2013 AFP Electronic Payments Survey

Extended Remittance Information (ERI)

In November 2011, the Federal Reserve Banksoperator of the Fedwire Funds
Service, and The Clearing House Payments Company LLCoperator of the
Clearing House Interbank Payments System (CHIPS), introduced a new
message format to allow businesses to include about 9,000 characters of extended
remittance information (ERI) in the wire payments they originate. There are
three different formats to send wires with ERI:
The Structured format allows organizations to send ERI in predefined
fields that can be validated by the originating bank and wire operators,
making it easier to automate accounts receivable postings.
The Unstructured format allows ERI to be sent in free text or in a format
that conforms to a known industry standard, such as the ANSI X12 EDI/
STP 820, ISO 20022, General XML, SWIFT Field 70 and UN-EDIFACT.
The Related format allows organizations to include information such as
URLs that directs the beneficiary to retrieve the remittance data if its not
included in the payment message.
Three-quarters of organizations anticipate sending and receiving at least one
domestic wire payment with ERI on a monthly basis if they had ERI capabilities.
The percentages drop to 57 percent and 54 percent, respectively, for organizations sending and receiving cross-currency wire payments.
Anticipated Number of Monthly Wire Payments Made/Received with ERI
(Percentage Distribution)

Sending Domestic
Payments

Receiving Domestic
Payments

Sending
Receiving
Cross-Currency Cross-Currency

None 27% 27% 43%

46%
1-5

20 20 23
24

6-20 20 17 14
12
21-100
20 20 11
10
More than 100

13

16

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2013 AFP Electronic Payments Survey

Even if a majority of organizations anticipate making/receiving wire payments with ERI

if the capability were available to them, many are wary of making the necessary investments
in their accounting systems and treasury workstations in order support such a capability.
Fifty-three percent of organizations are not willing to make the necessary investments to
support wire payments with ERI for wire payments they make while 55 percent would not
make the investments for the same capability on the receipt side.
Still, more than a quarter or organizations27 percentalready have either an
accounting system and/or treasury workstation that generates remittance information
sent with a wire payment. Similarly, 23 percent of organizations report having the same
capability on the receipt side.
Willingness to Make Investments in Accounting System/Treasury Workstation Upgrades
to Support the Ability to Send/Receive Wire Payments with ERI
(Percentage Distribution)

Send Receive
Wire Payments Wire Payments

No, organization is not willing to make the investments to

support wire payments with ERI.

53%

55%

Organization is interested in making the necessary investments

to support wire payments with ERI.

19

22

Organizations accounting system already supports the ability

to create remittance information that can be sent in a wire payment.

12

10

Organizations treasury workstation and accounting system already support

the ability to create remittance information that can be sent in a wire payment.

Organizations treasury workstation already supports the ability to create

remittance information that can be sent in a wire payment.

Two-thirds of survey respondents indicate that their organizations are not willing to
pay a per transaction fee in order to send/receive wire payments with ERI. A sixth of
organizations would be willing to pay up to $5.00 per transaction to send or receive wire
payments with ERI
Willingness to Pay Transaction Fees to Send or Receive Wire Payments With ERI
(Percentage Distribution)

Willingness to Pay to Send

Wire Payments with ERI

Willingness to Pay to Receive

Wire Payments

66%

66%

Up to $5.00 per transaction

17

17

$5.00 to $9.99 per transaction

More than $10.00 per transaction

16

15

No additional fee

Not interested in ERI

* - less than one percent

30

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2013 AFP Electronic Payments Survey

There are a number of different formats in which ERI can be delivered with wire
payments. Among the most desired by organizations are:
Free text (cited by 51 percent of respondents)
EDI (45 percent)
Structured fields (such as, invoice number, net amount, date, discount, amount)
(40 percent)
SWIFT format (30 percent)
General XML (17 percent)

Preferred ERI Formats to Send/Receive with Wire Payments

(Percent of Organizations)

60%
51%

50%

45%

41%

40%
30%

30%
20%

17%

10%

13%
5%

0%
Free text
EDI

www.AFPonline.org

Structured
SWIFT
General
ISO
UN-EDIFACT
fields format XML 20022

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2013 AFP Electronic Payments Survey

llll l llllllll
Account Validation Services
The 2013 AFP Electronic Payments Survey, in support of The Electronic Payments Associations (NACHA) desire to gather information and perspectives
on the use of solutions that would support account validation services, asked
respondents about their organizations current use of account validation services
as well as feedback on detailed requirements for an account validation service for
ACH payments.
Two-thirds of organizations use an ACH pre-notification entry or pre-note to
validate account information to originate an ACH payment. Other validation
methods used include:
Micro-deposit or trial-deposit method (cited by 27 percent of respondents)
Check verification services (15 percent)
Instant account validation method (13 percent).
Methods Used to Validate Account Information to Originate an ACH Transaction
(Percent of Organizations)

80%
70%

69%

60%
50%
40%
30%
20%

27%
15%

13%

10%
0%

32

5%

ACH
Micro-deposit
Check
pre-notification
or trial-deposit
verification

entry or
method
services

pre-note
(penny-test)

Debit card
Instant account
authorization
validation method
validating the
account via a bank
login process

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2013 AFP Electronic Payments Survey

Organizations prefer the length of time to validate an account to be as short

as possible. In fact, 53 percent of financial professionals want any validation
service to be in real time. Another third would accept a validation system that
works within the same day (or even better, within four hours). Twelve percent
would accept a validation system that would respond by the next day.
Preferred Wait Time for a Response to a Validation Request
(Percentage Distribution)
Real time
4 hours

53%
5

Same day

28

Next day

12

Other 1

There are a number of elements that financial professionals prefer to see in

account validation services. Among these are:
Valid routing and transit number (RTN)
(cited by 84 percent of respondents)
Valid account number for that RTN (72 percent)
Name match (63 percent)
Indication whether the account is eligible to receive an electronic entry
(19 percent)
EIN or D&B number match to account (18 percent)
Preferred Elements Included in an Account Validation Services
(Percent of Organizations)

Valid routing and transit number (RTN)

84%

Valid account number for the RTN

72

Name match

63

Indication whether the account is eligible to receive an electronic entry 46

EIN or D&B number match to account

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2013 AFP Electronic Payments Survey

llll l llllllll Conclusions

Results from the 2013 AFP Electronic Payments Survey show that although their
use is declining, paper checks continue to be the most often used payment
method in the U.S. Paper check use still accounts for about 50 percent of B2B
payments, but that is down seven percentage points from the share reported in
the 2010 AFP Electronic Payments Survey. It should be noted, however, that the
rate of the decline in overall check use has slowed compared to results reported
in previous electronic payment surveys conducted in 2010 (57 percent check
use) and 2007 (74 percent check use).
Nevertheless the trend is shifting from checks to electronic payments. The
transition is most dramatic among larger organizations where ACH and wire
transfer payments together outnumber checks for both outgoing and incoming
payments made to or from major trading partners.
Reasons for this trend are related to the benefits of transitioning to electronic
payments/receipts, including cost savings, improved cash forecasting, fraud control and increased efficiency efforts such as straight-through processing (STP).
Combined with the successful efforts made by banks to clear checks electronically via images or the ACH network, the trend toward electronic transactions
for commercial payments is steadily on the rise.
Larger organizations appear to be more committed to shifting their payments
from paper to electronic. Reasons include:
Larger companies are in a better negotiating position when convincing business partners to make the shift from paper to electronic methods.
Larger organizations have better access to resources, such as IT, to make
necessary investments in modern, electronic payment systems facilitating
straight-through processing (STP), etc.
It is noteworthy that nearly half of survey respondents report that their organizations are very likely to commit to electronic payments for their major suppliers within the next three years.
Many organizations operate globally and conduct business with international
partners. Thus, they need to conduct cross-border transactions involving multiple currencies. The vast majority of payments for these transactions are sent via
wire transfer (65 percent), with 13 percent of payment volume conducted by
treasury operations in local countries. The top factors driving the choice of payment method for cross-border payments include contract requirements, the size
of the transaction as well as cost and risk.

34

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2013 AFP Electronic Payments Survey

The survey results reflect how globalized U.S.-based businesses currently are.
Since most cross-border payments are driven by contract requirements or the
size/purpose of the transaction, the popular use of wires reflects a higher perception of risk, a lack of other acceptable alternatives, or in some cases simply a
need for the speed and finality features that are unique to wires.
The introduction of the Single Euro Payment Area (SEPA) in the European
Economic Community presents some challenges to organizations. Sixty-two
percent of companies represented in the survey are subject to SEPA, but only a
quarter are currently fully compliant. This is especially noteworthy considering
the migration date of February 1, 2014 is fast approaching.
Three-quarters of organizations would, if they had the capability, send and
receive at least one domestic wire payment with ERI. But even with interest in
the service, there is significant resistance to making the necessary investments to
facilitate ERI. Also, there is lack of any willingness among organizations to pay
any additional fees for ERI service.
Organizations continue to report progress in integrating their payment and
accounting systems. A large majority of companies have integrated their check
payments systems and ACH systems. More than half have integrated their card
and wire systems.
Mobile banking and payments have received a lot of attention in the press, but
the focus has been primarily on consumer applications. Since the 2010 survey,
the share of organizations using mobile payments has grown. A higher percentage
of respondents reports that their organizations are considering expanding their
use of mobile payments over the next three years. Still, there is a large share of
organizations that does not plan on using mobile payments, and almost six out of
ten do not plan to initiate or accept mobile payments from customers.
Another challenge facing organizations is the adoption of the EMV standard
for integrated chips in credit and debit cards. While the next adoption timeframe
in the U.S. is October 2015, a significant majority of companies that expect to be
affected by EMV have not yet made any changes to adapt to the standard.
While organizations face challenges in converting to electronic payments/
receipts, overall no single factor is considered a major barrier. However, the difficulty of convincing customers and suppliers to accept electronic payments as
well as standard formats for remittance information and shortage of IT resources rank as the highest barriers. These same obstacles have endured for several
years. Placing additional focus on finding solutions to overcome these obstacles
is clearly warranted for organizations, their banks and other key vendors as the
march towards greater use of electronic payments continues.

www.AFPonline.org

2013 Association for Financial Professionals, Inc. All Rights Reserved

35

2013 AFP Electronic Payments Survey

lllllllllllll About the Survey

In September 2013, the Research Department of the Association for Financial
Professionals sent a 34-question survey to its corporate practitioner members
and prospects with the following job titles: cash manager, director, analyst and
assistant treasurer. When the survey closed, AFP had received 484 responses.
The modified response rate from AFP corporate practitioner members only
(after adjusting for bad e-mail addresses, etc.) was approximately ten percent.
Financial professionals who responded to the survey on behalf of their organizations are representative of AFPs membership as a whole. The typical respondent works for an organization with annual revenues of just over $1 billion.
The largest percentage of respondents is employed in manufacturing, followed
by energy and retail. The following tables provide a demographic summary of
the survey respondents.
Industry Classification

Annual Revenues

(Percentage Distribution)

(Percentage Distribution)

Manufacturing 21%

Under $50 million

Energy (including Utilities)

$50-99.9 million

15

7%

Retail (including Wholesale/Distribution)

$100-249.9 million

Health Services

$250-499.9 million

12

Insurance 8

$500-999.9 million

15

Government 4

$1-4.9 billion

36

Banking/Financial Services

$5-9.9 billion

Software/Technology 4

$10-20 billion

Real Estate

Over $20 billion

Non-Profit (including Education)

Median

$1.5 billion

Transportation 3
Hospitality/Travel 3
Business Services/Consulting

Construction 3
Other 8

36

2013 Association for Financial Professionals, Inc. All Rights Reserved

www.AFPonline.org

2013 AFP Electronic Payments Survey

Number of U.S. Business-to-Business Payments Made per Month

(Percentage Distribution)

Number of U.S.
All
Revenues
B2B Payments per month
Respondents
Under $1 Billion

Up to 500

30%

Revenues
at Least $1 Billion

46

16%

501-1,000

18

20

16

1,000-5,000

29

22

35

5,001-10,000

12

17

11

26

Over 10,000

Percentage of Total Transaction Volume Sent Cross-Border (Non-U.S.)

(Percentage Distribution)

All

Respondents
None

Revenues
Under
$1 Billion

Revenues
at Least
$1 Billion

Less than 1,000

B2B Payments
made/month

Greater than 5,000

B2B Payments
made/month

29% 24% 24% 21%

35

Less than 5%

38

5-10%

17 15 18 20

16

11-20%

5 5 5 6

21-30%

4 3 5 5

31-40%

3 3 3 2

41-50%

2 1 1 2

More than 50%

45

41

29%

35

* - less than one percent

www.AFPonline.org

2013 Association for Financial Professionals, Inc. All Rights Reserved

37

AFP Research

AFP Research provides financial professionals with proprietary and timely research that drives
business performance. The AFP Research team is led by Managing Director, Research and Strategic
Analysis, Kevin A. Roth, PhD, who is joined by a team of research analysts. AFP Research also draws on
the knowledge of the Associations members and its subject matter experts in areas that include bank relationship management, risk management, payments, and financial accounting and reporting.
AFP Research also produces AFP EconWatch, a weekly economic newsletter. Study reports on a
variety of topics, including AFPs annual compensation survey, and AFP EconWatch, are available online at
www.AFPonline.org/research.

About the Association for Financial Professionals

Headquartered outside Washington, D.C., the Association for Financial Professionals (AFP) is the
professional society that represents finance executives globally. AFP established and administers
the Certified Treasury Professional and Certified Corporate FP&A Professional credentials, which
set standards of excellence in finance. The quarterly AFP Corporate Cash Indicators serve as a
bellwether of economic growth. The AFP Annual Conference is the largest networking event for
corporate finance professionals in the world.
General Inquiries
Web Site
Phone

AFP@AFPonline.org
www.AFPonline.org
301.907.2862

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