The benefits of e-payments and virtual banking have been widely discussed before, but widespread adoption has yet to be achieved.
Recent research by US payment processing and information management service provider WEX discovered that, even in countries and regions with high levels of digital penetration, physical cheques remain the most common form of business payment.
Clearly, obstacles remain to businesses making the transition to e-payments and virtual banking. However, these issues can be easily overcome.
Many businesses continue to use traditional banking services to get things done. And many don’t have a problem with this, as it’s the way it’s always been done. New employees are shown the well-tested processes, without questioning them, while incremental improvements are made only once there is broad agreement across the organisation.
But by taking this approach, businesses are missing out on the efficiency and flexibility that e-payments bring. They are paying additional costs to make financial transactions, particularly if they are international in nature, while processes such as reconciling invoices will continue to be cumbersome and time-consuming.
Like with any new way of doing things in an organisation, the use of e-payments and virtual banking will require some early converts to get the ball rolling. Members of the finance team could do this by discussing the benefits they have seen when using virtual banking away from work, and how these could translate to organisational opportunities.
The use of e-payments within the business could then be piloted to determine whether it would be suitable, and if it is, to iron out any issues. While there may be some naysayers, if the benefits are proven, they will find it hard to argue.
Compliance and security concerns
As with any new technology that involves financial transactions, some of the caution from businesses around e-payments is due to concerns around security and compliance.
But most providers of these services are members of a range of regulatory organisations or subscribe to the rules and regulations these put in place. If organisations perform their due diligence, it will become clear which ones can be trusted to be secure and reliable.
ePayments, for example, holds a PCI DSS Level One certificate, ensuring that the card details of clients are handled according to the highest security standards. The company is also licensed by the UK Financial Conduct Authority to issue e-money for its clients and their customers and is a principal member of MasterCard, meaning it can directly issue payment cards for use anywhere in the world.
ePayments is also part of the Single European Payments Area and SWIFT secure messaging system that facilitates financial transactions for banks and other financial services organisations. This means it can send wire transfers using the IBAN or SWIFT international bank codes that identify particular banks worldwide.
Acquiring these certifications and memberships is no mean feat, and shows that e-payments providers are serious about keeping financial transactions secure and in line with national and international regulations.
Financial transactions for businesses are tied to numerous other systems and applications within an organisation. Changing the way in which financial transactions are carried out will therefore have implications beyond which bank is being used.
Many companies are still overly reliant on manual payments. According to WEX, IT issues remain a top factor stopping businesses from adopting e-payments – in particular, interoperability concerns between e-payments systems and legacy ERP platforms.
As e-payments are internet-based, switching to cloud-based business applications can improve interoperability, as well as the security of transactions. With most legacy systems likely to move to the cloud in the future, this issue will probably become less important. But those interested in adopting e-payments in parallel with on-premises technology should speak to their technology team and suppliers to work out whether integration is possible.
Naturally, e-payments may be better suited to some types of companies rather than others, but it’s likely that – whatever industry your business operates in – there will be some areas in which e-payments and virtual banking could bring benefits. And while there are obstacles to adoption, they are by no means unsurmountable.