Electronic Payments: What Your Business Needs to Know?

Over the past few decades, we have seen constant advances in electronic payments and e-payment systems thanks to their unmatched convenience. As consumer adoption has skyrocketed, businesses have started to follow suit with the need for, and benefits of, electronic payments becoming even more pronounced in the wake of the COVID-19 pandemic. Transitioning to electronic payments can help your organization pay vendors quickly, reduce risk, increase control, and improve visibility. There is a reason why thousands of middle market businesses are leading the way to a paperless accounts payable future by taking advantage of e-payments.

What are Electronic Payments?

Electronic payments, or e-payments, are a way of making transactions or paying bills online or through an electronic medium, without the use of physical checks or cash. The most popular methods of electronic payments include credit cards, debit cards, virtual cards, and ACH (direct deposit, direct debit, and electronic checks).


With most electronic payment methods, the hard costs and fees associated with traditional B2B payments like checks are no more — including paper, postage, and manual labor expenses.


The Benefits of E-Payments

Electronic payments and e-payments systems are highly convenient to both businesses and their suppliers. In the context of accounts payable, e-payments are a win-win in that they reduce costs, improve relationships, increase visibility and provide enhanced security when compared to traditional checks. Here’s how:


  • Lowered Processing Costs: The more payments a business can process electronically, the less they spend on paper and postage, along with the time required to print, sign, stuff, and mail checks. In fact, shifting to a holistic e-payments strategy can reduce payment processing costs up to 80 percent.
  • Strengthened Supplier Relationships: Businesses can improve vendor relations by facilitating quicker, more secure payments that include rich remittance data for easier reconciliation.
  • Increased Payment Security: Electronic payments are inherently more secure than paper checks, and specific methods like virtual cards offer even greater protection against fraud. On top of that, best-in-class e-payment systems include additional features and controls to help secure the payments process.
  • Enhanced Visibility: E-payment systems provide your business with greater visibility into payment statuses, financial metrics, and accurate audit trails. They additionally reduce the costs and probability of data entry mistakes.


The Pros and Cons of Different Electronic Payment Types

It’s likely that your business will utilize a combination of electronic payment methods. In order to reap the most benefits, it is important to understand the risks and rewards of each option. Some methods are better suited to certain situations: For example, ACH debit pulls are best for recurring charges, whereas virtual cards are ideal for sending highly secure vendor payments.


Let’s explore the pros and cons of common electronic payment types:


      ACH Debit Pull

These are most commonly used for payroll, such as direct deposit, and online payments. ACH debit pulls work via an electronic batch payment system wherein the payee or vendor initiates the “pull” of funds owed from the payer’s account.


  • Pros: ACH debit pulls are typically low-cost, if not free.
  • Cons: Pulls can take several business days to process and are high-risk compared to other e-payment options as vendors have access to your account information.


      ACH Credit Push

These are most commonly used to make known vendor payments. ACH credit push also works via an electronic batch payment system but is differentiated by the payment being initiated by the payer and “pushing” funds outward from their account.

  • Pros: ACH payments cost significantly less to process than credit cards and provide the flexibility of one-time or recurring payments
  • Cons: Unlike debit pull, banks charge a fee for ACH credit pushes, making them costly to process. In addition, ACH payments involve real account information, making them higher-risk. These are typically only available to larger companies with high-volume payments. With both ACH debit pulls and ACH credit pushes, transaction data is not automatically transferred, leading to more time spent reconciling invoices.

Related content: With ACH Fraud on the Rise, Accounts Payable Teams Need to Be Vigilant


      Credit Card

Most commonly used to make retail purchases, credit cards allow the cardholder to borrow money from the card issuer up to a predefined limit.

  • Pros: These are merchant-initiated transactions paid from the cardholder’s credit line, making them a speedy, personal payment method.
  • Cons: Credit cards may not be accepted by vendors due to associated processing fees. In addition, a plastic card with a single number to make all payments is susceptible to fraud.


      Debit Card

Like credit cards, debit cards are most frequently used to make retail purchases and are merchant-initiated transactions. However, instead of charging funds to the cardholder’s credit line, these transactions are pulled directly from the cardholder’s bank account.

  • Pros: With debit card payments, the vendor is provided certainty of payment as well as the benefits of saved time and effort.
  • Cons: While just as low-cost and convenient as credit cards, debit cards offer little protection for purchasers and are only slightly less expensive for vendors to accept.


      Commercial Card

Commercial cards are credit cards issued by organizations to employees in order to pay directly from a corporate line of credit for business-related purchases. These transactions are typically T&E expenses, recurring payments, and vendor purchases.

  • Pros: Commercial cards are low-cost, speedy, and fairly secure.
  • Cons: However, they are often difficult to track and reconcile from an invoice perspective.


      Virtual Card

A virtual card is a plastic-less card that allows businesses to generate single-use 16-digit numbers that are authorized for a specific payment amount.

  • Pros: Virtual cards have zero cost to the payer, are speedy, and highly secure due to a process called payment tokenization that ensures the business’s bank account information cannot be compromised. They also allow businesses the opportunity to receive rebates on purchases.
  • Cons: Currently, a smaller percentage of vendors accept virtual cards compared to other methods, though this number is growing as both businesses and suppliers better understand the benefits.


      Purchasing Card (P-Card)

Like Commercial Cards, P-cards are a type of company credit card that allows purchases to be made without using traditional invoice creation. The difference is that P-cards typically have additional restrictions or spending limits when it comes to corporate purchases.

  • Pros: They are also low-cost, fairly secure, and speedy.
  • Cons: There is inherent difficulty in auditing individual P-card transactions for high-risk or fraudulent activity.


      Wire Transfer

Wire transfers are real-time payments that can be made for domestic and international purchases wherein cash is automatically transferred from one account to another.

  • Pros: Initiation of a wire transfer can take only minutes and, within the U.S., transfers can be processed as quickly as same-day. Because wire transfers require a confirmation of funds, they are a more guaranteed payment method than paper checks.
  • Cons: Unfortunately, wire transfers are costly and pose a significant security risk to the payer, despite the quick turnaround time. Because of the immediate availability of transferred funds, wire transfers are prime targets for those who would look to hijack bank account information.


Because every business and every vendor is different, it is highly unlikely that any organization will use only one electronic payment method in their accounts payable. As an organization grows and its processes become more complex, it becomes increasingly important that the business not only embrace electronic payments as a solution, but employ integrated payables as a solution.


With MineralTree, organizations can optimize their payment processes and choose the most efficient payment methods for the given transaction. We can help you to streamline your payables process by consolidating multiple payment types into a single automated workflow, maximizing card rebates, reducing costs and improving working capital, ultimately providing you and your business with greater control over your payments.


Why Your Business Needs to Consider E-Payments

Every year, businesses in North America make $27 trillion dollars in B2B payments but spend an estimated $510 billion in manual accounts payable costs. A key reason for these exorbitant costs is that 60% or more of payments are still made by paper checks. While most financial leaders understand the need to shift to electronic payment systems, many do not know where or how to get started.


For companies running upwards of 500 check payments per month, just the processing of these payments would consume an entire working day. After migrating to MineralTree, or other e-payment systems, most saw that processing time cut down to less than two hours.


On average it costs about $5 for each paper check transaction, but a typical e-payment can reduce processing costs by up to 80%. In addition to the cost savings, electronic payments help to manage risks. Buyers want to fully understand what they are paying for and to manage their working capital as effectively as they can. Vendors want to know the status of the payment and when they can expect it. Both want the visibility to potentially support any disputes.


Integrating electronic payment solutions into their accounts payable processes is just one way that businesses are able transition from the hassle and risk of paper checks.

Electronic Payments Expert Insights Email

Vijay Ramnathan, President, MineralTree

Vijay Ramnathan got started in the accounting and finance profession and has spent his entire 20-year career in payments and financial services. Vijay is passionate about having a strong understanding of customer needs and creating distinctive solutions that drive value for all stakeholders. Throughout his career, he has built new products and businesses that have delivered over $450 million in new/incremental revenue for companies like US Bank, Fifth Third Bank, and Fleetcor.