Consultants Celent are predicting an end to the dominance of cheques in North American business-to-business transactions, forecasting that business-to-business adoption of e-payments will reach 58 per cent of total volume by 2010.
Despite the formidable incumbent status of the cheque in business-to-business transactions, its dominance will wane, says Celent. The firm argues that a variety of industry, technological, and regulatory trends will propel the adoption of e-payments. The economic interests of banks, third-party solution providers, and corporations will also align, says Celent, 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 favour 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.
“The state of business-to-business payment processing today is a far cry from ideal,” says Alenka Grealish, author of the report and manager of the banking group at Celent. “The only automated part of the process at most mid-size 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. Banks, corporations, and third-party technology companies will pull their oars in the same direction to implement standards and integrate accounting and payment systems.”