Crossing Frontiers in Business-to-Business Electronic Payments (Part I)

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11 January 2007


San Francisco, CA, USA January 11, 2007

Crossing Frontiers in Business-to-Business Electronic Payments

The migration to electronic payments for B2B transactions has been far from a gold rush. Nevertheless, the frontier shows promise and more pioneers are willing to blaze a trail. As a result, Celent predicts that B2B e-payments will pass the halfway adoption mark by 2012.

In a new report, Crossing Frontiers in Business-to-Business Electronic Payments, Celent discusses the good news and the bad news in the e-payments migration story. The good news is that companies are increasing their use of e-payments. The slope of the business-to-business e-payments adoption curve is steepening. By 2012, the scale will tip in favor of e-payments, with their share of transaction volume reaching over half. The bad news is that the pace is extremely slow, encumbered by manual processes, legacy systems, proprietary formats, and other priorities.

A triumvirate of pioneers is required to cross the frontier, including banks, companies, and technology providers. "While banks have historically played the lead wagon role in developing payment systems and have consequently molded them to fit their needs, they are now sharing the reins. Next generation payment systems are being structured with companies' needs in mind and will be influenced by technology providers, consortiums, and payment networks," says Alenka Grealish, author of the report and manager of the Banking group at Celent.

Through extensive interviews with pioneers, Celent distills their key traits and discusses the reasons that e-payment adoption will continue to march forward. Companies that are frontiersmen share several traits: first and foremost, a willingness to change; second, a desire to alleviate the pain either at the operational and/or financial level caused by manual processes and paper checks; and third, a desire to add a revenue stream to a cost center. "Any discussion around adoption of e-payments must be begin with an examination of the changes required by companies, not only technological, but also organizational and process-related," comments Grealish.

Trailblazing banks are break three daunting trails: lowering costs through a technological overhaul, raising revenue through innovative value-added services, and break-downing organizational silos, which choke investment in enterprise level infrastructure and cross-fertilization. "Only a half a dozen global banks will end up being both scale players and consequently innovators. At the national level, a handful of banks will stand out as adding significant value beyond transaction processing," Grealish concludes.

The report is 54 pages and contains 25 figures and three tables.

A table of contents is available online.

Members of Celent's Wholesale Banking research services can download the report electronically by clicking on the icon to the left. Non-members should contact for more information.