What is Electronic Payment Processing?
Electronic payment processing is any method of payment conducted without any need for a physical cash or paper checks to change any hands. This makes it easier for consumers (or businesses) to purchase items from all over the world without worrying about their payment getting lost in the mail or waiting days to be certain that their payment has been processed correctly and received by the seller (or supplier).
Because of this convenience factor, in addition to the continued rise of digital markets and online shopping, electronic payment systems have continued to gain in popularity—especially for businesses that need to ensure they are paying their suppliers. One of the most important and beneficial features of electronic payment system options over traditional paper payment system options is that electronic payments are routed directly from one bank account to another—and these transactions are quick and secure for both parties involved. Because of this, many businesses are looking for ways to transition their payment processing systems to be 100 percent paperless, which can dramatically reduce the overall cost of your accounts payable process. Another extremely important benefit of electronic payment systems is that bill payments can be automated, which can dramatically reduce the amount of time and manual labor that your AP team needs to put into each bill payment. In the long run, this can not only save your AP team time but also help your business ensure that it is on top of all bill payments by paying your suppliers securely and promptly.
Electronic Payment Processing Methods
With the societal shift towards a completely digital market, businesses are needing to adopt new and more advanced systems to ensure they are paying their suppliers on time and securely. Because of this, there have been an increased number of electronic payment methods and systems that businesses can select from to pay their suppliers. Like any other payment method, when you are looking for online payment methods for your business to use to handle bill payments, it is a good idea to keep “the magic triangle” in mind.
What is the magic triangle of electronic payment methods? Just like any other type of payment method, the magic triangle refers to the three S’s of desired payment method characteristics: simplicity, speed, and security.
Even though there are many different types of electronic payment system solutions available in the market today that your business can choose from, it is important to keep the magic triangle in mind and opt for a solution that helps you improve each of those S’s. For example, a bill payment software like AvidXchange helps your business simplify your AP processes by helping you automate your bill payments, and with AvidPay—AvidXchange’s full-service payment automation solution—you can also dramatically reduce the amount of time your AP team needs to spend on each bill as well as reduce the risk of fraud.
Electronic Payment Processing Examples
Before getting into examples of the types of electronic payment methods, you may be asking, “What is electronic payment and why is it important?” As mentioned above, electronic payments are payments that are processed 100 percent electronically and are a transaction from one bank to another bank. Understanding—and using—these types of payments is important because as society advances, the market for products and services has been transitioning into more of a digital market rather than a traditional brick-and-mortar market.
Due to the steadily growing preference for electronic payment methods over traditional payment methods, there is a larger variety of electronic payment methods available for both businesses and consumers in today’s market. It is important to distinguish between these types of electronic payment methods because each one can offer a different set of features or benefits. These different types can be described in three categories. The first category is a one-time electronic payment from a consumer to a vendor. The second is a recurring payment from a consumer to a vendor. And the third is an automatic payment from a bank to a vendor.
The electronic payment procedure for the first two of these categories is relatively similar, with the payment coming from the consumer to the vendor. In the third category, on the other hand, the payment is going directly from the bank to the vendor and only happens when the bank itself sets up a recurring payment to the vendor.
Electronic Payment Processing Apps
Because many businesses are finding it necessary to adopt and implement an electronic payment system into their accounts payable processes to better keep up with their bill payments and process payments electronically rather than with paper receipts and bill invoices, many different electronic payment systems have been developed. Since there are many different electronic payment system examples to choose from on the market, it can be difficult for a business to determine which system they should implement in their own business.
One incredibly useful way to determine whether an electronic payment system is going to be successful is to look at some of the many electronic payments reviews that mention the system. Utilizing a system that has a lot of good reviews and is supported by many suppliers—for example, AvidXchange—can help ensure that the electronic payment app that you are using will be helpful in streamlining and optimizing your business’s AP process. With over 825,000 suppliers in the AvidPay Network, AvidXchange offers not only the tools you need to create custom workflows with 24/7 remote access and paperless bill payments but also a huge supplier network for your business to interact with.
Electronic Payment System Advantages and Disadvantages
Just like any type of payment system, there are both advantages and disadvantages of electronic payment system solutions. What are the disadvantages of electronic payment system solutions? When speaking about disadvantages of payment system solutions, one of the most important in determining whether or not the system actually improves the magic triangle for your business. If it does not improve your business’s magic triangle for your bill payment processes, then that is a great disadvantage compared to your competition. As for the advantages of payment systems that are 100 percent electronic, the main advantage of electronic systems is that they allow you to make secure payments at a fraction of the time it takes to send a traditional paper check in the mail.
Because of the increasing popularity of e-commerce and the rise of the digital economy, the importance of electronic payment system solutions cannot be overstated. It is incredibly important that you ensure that your business can stay competitive with others while also making sure that you are keeping your suppliers happy with the quick, secure, and easy payments that an electronic payment system, like AvidXchange, can bring to your business.
As society continues to embrace online shopping and the digital market, the popularity of online or electronic payment systems continues to rise. Because of this, there are many different articles and comparison pieces that discuss the advantages and disadvantages of payment system solutions that are electronic versus payment system solutions that are more traditional.
Oftentimes, it is much easier to find descriptions of the advantages of payment systems that are completely electronic because a lot of articles are working to help increase the popularity of a specific system or electronic payment systems in general. Because of this, it can be incredibly difficult to find a comparison or article that mentions three disadvantages of e-payment system solutions. Even if you do a web search for “what are the disadvantages of electronic payment system solutions” it can be difficult to find many disadvantages in comparison to a traditional payment system. This is because, in today’s market, an electronic payment system solution like AvidXchange can be of the utmost importance to keep your business in the good graces of your suppliers and help you to stay competitive in the market.
How to Find the Right Electronic Payment System
It can be difficult finding the right system that can help your business better manage and process your electronic payments, especially with all of the options available on the market today. Since so many businesses need to implement an electronic payment system in order to keep up with their bill payments, it has become a rather large market. This can be seen by the number of articles on electronic payment systems that come up if you do a simple web search. So, with all of these options, how do you find the right system for your business?
One thing to keep in mind is implementing a new software system does not mean that you have to completely overhaul your current bill payment system. For example, with AvidXchange’s bill payment software, AvidPay, you can embrace paperless billing, custom workflows, and 24/7 remote visibility while still not abandoning your current accounting system.