Digital Payments for Businesses: How They Work & Benefits

Economic uncertainty, leaner teams, and increasing fraud risks are reshaping how businesses manage their financial operations. Accounts payable (AP) teams, in particular, are under pressure to process higher payment volumes with fewer resources, all while improving accuracy and oversight.

To meet these challenges, organizations are moving away from paper checks and manual workflows in favor of digital payment systems. By digitizing payments, AP teams gain real-time visibility, reduce processing costs, and achieve stronger control over cash flow — enabling finance functions to move faster and operate more efficiently in a data-driven economy.

Key takeaways

• Digital payments give AP teams greater efficiency and visibility, replacing paper checks with secure, electronic transactions
• Automation reduces manual workload and risk, helping finance teams process payments faster with fewer errors
• Enhanced security and fraud protections safeguard sensitive data through encryption and tokenization
• Digital cards and integrated payment platforms are shaping the future of B2B transactions by combining flexibility, control, and real-time reporting

What are digital payments for businesses? 

Digital payments in accounts payable let businesses transfer funds electronically through networks like ACH, wire, and card systems. 

Instead of relying on manual invoicing or check processing, companies can issue and receive payments digitally through connected banking and AP platforms. This shift helps reduce costs, eliminate delays, and provide real-time visibility across accounts payable operations.

Are digital payments secure for businesses?

Security is a core advantage of digital payments. Modern systems use encryption, tokenization, and fraud detection to protect each transaction from start to finish. That means:

• Every payment is validated through multi-factor authentication before funds move between banks.
• Sensitive data is encrypted or, in some systems, replaced with tokens that can’t be reused, reducing the risk of breaches.
• Continuous network monitoring and PCI DSS compliance reduce the likelihood of fraud and data theft.

Momentum toward more secure, digital-first payment systems is also growing at the federal level. The U.S. Treasury’s Executive Order 14247, “Modernizing Payments To and From America’s Bank Account,” reinforces this shift toward secure, digital-first payment systems. The order required the Treasury to phase out paper check disbursements and receipts, including vendor payments, by September 30, 2025.

As the largest issuer of paper checks in the country, the Treasury’s transition is expected to accelerate digital payment adoption across both the public and private sectors. Particularly for businesses that supply goods or services to federal agencies, it’s a signal to ensure their own payment processes are ready for this digital future.

How do digital payments work in B2B transactions?

Digital B2B payments follow a series of steps designed to move money safely and efficiently between two organizations.

1. Buyer initiates a digital payment
2. Payment details are securely transmitted
3. Authentication and fraud checks are performed
4. Payment processor routes the transaction
5. Issuing and acquiring banks communicate
6. Funds are transferred and settled
7. Transaction is recorded and reconciled

Each stage verifies the transaction, protects sensitive information, and ensures the payment is accurately recorded in financial systems.

1. Buyer initiates a digital payment

The buyer starts the process by creating a payment request in an AP or ERP system once an invoice is approved. Payment details such as vendor name, amount, and due date are pulled automatically from stored records. This ensures accuracy and consistency before the payment is released.

2. Payment details are securely transmitted

Once initiated, the payment data is encrypted and sent through secure banking or card networks. Encryption converts sensitive details into unreadable code accessible only to authorized systems. This ensures no confidential information is exposed during transmission.

3. Authentication and fraud checks are performed

Then the payment processor runs authentication protocols to confirm the buyer’s identity and screen for irregularities. Advanced algorithms analyze transaction history and vendor data to detect anomalies. This extra layer of verification helps prevent unauthorized payments.

4. Payment processor routes the transaction

After verification, the processor sends the transaction through the appropriate payment network — ACH, card, or wire. Each network has unique clearing times and fees that affect how quickly funds are delivered. Routing ensures the most efficient and secure channel is used for each transaction type.

5. Issuing and acquiring banks communicate

The buyer’s bank (issuer) and the supplier’s bank (acquirer) exchange authorization messages to confirm the availability of funds. This confirmation guarantees that money can be transferred without disruption or reversal. The communication between banks typically occurs in seconds.

6. Funds are transferred and settled

Once authorized, funds move from the buyer’s account to the supplier’s. ACH payments typically settle within one to two days, while wire and real-time payments settle instantly. Faster settlements help suppliers access capital sooner and improve cash flow reliability.

7. Transaction is recorded and reconciled

After settlement, the payment information syncs automatically with the company’s accounting system. The system matches the payment to its corresponding invoice, creating a detailed digital record. This automation streamlines reconciliation and ensures compliance across financial reporting.

Types of digital B2B payments

Businesses can choose from multiple digital payment options depending on transaction volume, cost, and urgency. Each method offers unique advantages that support different aspects of cash management and supplier relationships:

• ACH transfers
• Wire transfers and real-time payments
• Corporate and commercial cards
• Virtual cards
• Buy now pay later

ACH transfers

ACH transfers move money between U.S. bank accounts through the Automated Clearing House network. They are cost-effective and reliable for recurring vendor or payroll payments. Because they support batch processing, companies can manage hundreds of payments in one transaction while maintaining traceability.

Wire transfers and real-time payments

Wire transfers are direct, high-speed transactions used for large or time-sensitive payments. Real-time payments (RTP) take this further by settling funds instantly, even outside traditional banking hours. Both methods provide confirmation receipts, allowing businesses to verify settlement immediately.

Corporate and commercial cards

Corporate and commercial cards streamline purchasing and travel expenses with preset spending controls. Each transaction produces detailed reporting, simplifying expense tracking and compliance. Many organizations integrate these cards into AP systems for centralized management across departments.

Virtual cards

Virtual cards in accounts payable let finance teams issue secure, single-use numbers for each vendor payment. Because these cards can’t be reused or shared, they significantly lower the risk of fraud and unauthorized spending. Every payment is matched automatically to its invoice, streamlining reconciliation and reporting.

Buy now pay later

Newer solutions like buy now, pay later (BNPL) for business give companies flexibility in managing short-term cash flow. These arrangements help preserve liquidity without delaying supplier payments. As BNPL platforms integrate into AP systems, they’re expanding the digital payment ecosystem for B2B transactions.

Benefits of digital payment systems for business

When businesses move to digital payments, their finance operations become faster and easier to manage. The change eliminates paper-heavy tasks and gives AP teams real-time insight into every transaction. Over time, this visibility supports better vendor communication and more accurate forecasting. A few of the key benefits that digital payments systems offer for businesses include:

• Faster transactions
• Lower operating costs
• Improved cash flow
• Enhanced security
• Better customer experience
• Easier record-keeping and reporting

Faster transactions

Digital payments eliminate delays from mailing or depositing paper checks. Funds can move within hours or even seconds depending on the method. This speed keeps cash flowing and strengthens supplier trust.

Lower operating costs

Automation replaces manual handling, postage, and check printing with secure electronic workflows. Businesses reduce administrative overhead and minimize human error. Over time, these savings compound, improving overall financial efficiency.

Improved cash flow

Digital systems provide real-time visibility into all outgoing and incoming payments. This allows finance leaders to forecast disbursements accurately and maintain healthy liquidity. More predictable cash flow enables smarter budgeting and investment decisions.

Enhanced security

When businesses use digital payments, each payment is encrypted, authenticated, and tracked across the entire transaction cycle. In addition to these security measures, tokenization eliminates sensitive data from circulation, significantly reducing breach risks. Together, these protections make digital transactions more secure than traditional paper-based processes.

Better customer experience

Suppliers gain confidence when payments arrive quickly and include clear remittance details. That level of transparency reduces confusion and strengthens communication between both sides. Over time, digital payments help transform vendor relationships into true partnerships built on reliability.

Easier record-keeping and reporting

Each digital payment automatically generates an electronic record that ties directly to its invoice. Finance teams can pull accurate reports in seconds instead of spending hours reconciling spreadsheets. With all data stored in one place, audits and compliance reviews become faster and far less stressful.

Why digital cards are shaping the future of B2B payments

Digital cards are transforming how businesses pay suppliers by combining speed, security, and control. As adoption grows, they’re becoming a cornerstone of modern AP strategies. A few reasons why digital cards are impacting the future B2B payments include:

• Instant issuance and on-demand access
• Stronger security with tokenization
• Seamless integration with AP platforms
• Flexibility for online and in-store transactions
• Growing adoption by banks and fintechs

Instant issuance and on-demand access

Digital cards can be generated immediately and assigned for one-time purchases, recurring expenses, or departmental use. This on-demand creation gives organizations tighter control over spend and faster response to changing business needs.

Stronger security with tokenization

Each digital card relies on payment tokenization, a process that replaces sensitive card details with encrypted digital tokens. These tokens carry no usable account information, making them worthless if intercepted. By removing real card data from the transaction, payment tokenization significantly reduces fraud risk and strengthens compliance with modern security standards.

Seamless integration with AP platforms

Virtual cards work natively within modern AP automation systems, allowing payments to be initiated and reconciled in the same environment where invoices are approved. 

The integration eliminates manual steps and connects transaction data directly to the general ledger. Finance teams gain continuous visibility into spending without sacrificing accuracy or speed.

Flexibility for online and in-store transactions

Beyond invoice payments, digital cards can be used for e-commerce, subscription services, or in-person purchases. The benefit is consistent security standards across all transaction types paired with simplified vendor management and record-keeping.

Growing adoption by banks and fintechs

Financial institutions and fintech providers are rapidly expanding digital card programs in response to corporate demand for smarter, safer payment options. These tools deliver valuable data insights that help businesses optimize cash flow and track spending patterns more precisely. As adoption widens, digital cards are shaping a new standard for how B2B payments are managed and secured.

Streamline digital payments with MineralTree

Managing multiple payment types is easier when everything runs through one automated payment system. MineralTree’s TotalAP connects invoice capture, approvals, and payments in a single system that keeps finance operations moving smoothly. 

AP teams can manage payments of any kind with greater visibility and control while reducing the manual work that slows them down. As payment volumes grow, TotalAP scales effortlessly to support continued efficiency and accuracy.

Discover how MineralTree’s TotalAP platform simplifies digital payments and strengthens your AP process.

Digital payments FAQs

Should businesses replace checks with digital payments?

Yes. Checks slow down cash flow and expose businesses to theft or loss. Digital payments eliminate those risks and offer faster, traceable transactions.

What is the difference between digital payments and electronic payments?

Digital payments take place through internet-connected platforms that automate the entire payment process. In comparison, electronic payments can include older payment methods like card terminals or EFTs that still require manual handling.

How do virtual cards work for vendors?

Each vendor receives a unique virtual card number and payment amount generated for that specific transaction. The card expires after use, eliminating the risk of reuse or fraud. Vendors benefit from faster settlement and clear remittance data for easier reconciliation.

Can small and mid-sized businesses adopt digital payments easily?

Yes. Cloud-based AP automation platforms remove the need for custom IT infrastructure. They integrate with accounting systems to make setup simple and affordable for growing companies.

What are the challenges of adopting digital payments?

Businesses may face resistance from suppliers accustomed to paper checks or outdated workflows. Integration with legacy ERP systems can also require planning. A flexible AP platform that supports multiple payment types helps overcome these barriers.

How are digital payments different from traditional card payments?

Traditional card payments rely on static physical cards and manual reconciliation. Digital payments use virtual credentials, encryption, and automated reporting for stronger control. The result is greater speed, visibility, and security across every transaction.