Businesses recognize the benefits of electronic payments, so why aren't they adopting electronic payments faster for business-to-business (B2B) transactions? According to the 2010 Federal Reserve Payment Study, checks written by consumers to businesses between 2006 and 2009 declined by 10% annually while checks written by businesses to businesses declined only 2%. Viewed another way, consumers abandoned checks five times faster than businesses did.
As we reported in our Q4 2010 PaymentMatters newsletter, the 2010 AFP Electronic Payments Survey identified key barriers to electronic payment adoption. They include the inability to send and receive automated remittance information with an electronic payment and a lack of standards.
To discus B2B remittance processing issues, the Federal Reserve Bank of Minneapolis hosted a meeting in June 2011 of standards organizations, banks, corporate treasurers, payment processors, vendors and others. Attendees agreed that the major problem was more than a lack of remittance standards (if anything there are too many standards). For a number of reasons, reconciliation of electronic payments with remittance information is just difficult. Bottom line: accepting a check payment is simpler.
Several meeting attendees decided to form the Remittance Coalition, whose objective is to increase the efficiency in making and reconciling B2B payments. The Coalition, which has since grown to over 80 members, plans to accomplish this by promoting more unified standards, processes and tools.
General information about the Coalition can be found on the Federal Reserve Bank of Minneapolis website. Also, see "The Remittance Coalition" by Debra Hjortland, Federal Reserve Bank of Minneapolis.