Business-to-Business Electronic Payments: Putting Wind in the Sails

January 28, 2005

Abstract

San Francisco, CA, USA January 28, 2005

Will the check’s dominance in business-to-business transactions ever wane? Celent Communications concludes that the electronic future is bright, predicting that business-to-business adoption of e-payments will reach 58 percent of total volume by 2010.

Despite the formidable incumbent status of the check in business-to-business transactions, its dominance will wane. Various industry, technological, and regulatory trends will propel the adoption of e-payments. The economic interests of banks, third-party solution providers, and corporations will align, overcoming the chicken-egg syndrome of insufficient demand to generate supply and vice versa.

The drivers of adoption include both collaborative and competitive forces and players outside the banking realm. The era of banks’ molding of payment systems in their favor is over. Next-generation payment systems will be structured with corporations’ needs in mind and will be influenced by technology providers. The gale force behind e-payments will come from the development and implementation of payment messaging standards and the alignment of economic gains. Once standards are in place, competitive forces will take over and lead to the launch of value-added products and services that leverage the standards.

According to Alenka Grealish, author of the report and manager of the banking group at Celent, "The state of business-to-business payment processing today is a far cry from ideal.The only automated part of the process at most midsize to large companies is payment initiation. Even for this element, however, the fact that a proprietary infrastructure tends to dominate makes it less efficient and more expensive than the ideal state, in which standards and open systems reign."

There is hope, however. "Banks, corporations, and third-party technology companies will pull their oars in the same direction to implement standards and integrate accounting and payment systems."

This 42-page report contains 20 figures and three tables. A

table of contents is available online.

of Celent Communications' Wholesale Banking research service can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

        

Send mail to info@celent.com with questions or comments about this Web site.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

San Francisco, CA, USA January 28, 2005

Business-to-Business Electronic Payments

Return to report Abstract

 

EXECUTIVE SUMMARY 3
THE E-PAYMENTS CLIMATE 5
  The US Remains Behind 5
  The Doldrums 6
  From Whence The Wind Will Blow 8
  Check Truncation: Slowing Demise 10
IN THE UPPER STRATOSPHERE: DEVELOPMENT OF STANDARDS 11
  Building the Future: XML-Based Standards 12
  Bringing Vested Parties to the Table 14
  Twist and Rosettanet in Action 17
  SWIFT Extending Its Reach to Corporations 21
  Leveraging an Established Standard: EPN 820 23
IN THE JET STREAM: BANKS AND TECHNOLOGY PROVIDERS 25
  Technological Linchpin 25
  Banks: Make or Break 29
ON THE GROUND: IMPETUS AT THE COMPANY LEVEL 33
  Hard Cost Savings 35
  Financial Efficiency 35
  Overcoming the Sticky Issues: Fraud and Float 36
FUTURE TRENDS 38
OBJECTIVITY & METHODOLOGY 41

Sign in to download reports and access personalized information