Transitioning From Paper To Virtual Payments, With A New Precept

There’s encouraging news on the B2B movement to embrace digital transactions and move away from the costs and inefficiencies tied to paper checks.  More firms are realizing that risk control and better information flow can result in better business results – and cash flow.  To that end, TSYS has introduced its Virtual Payments Precept payment solution, which as ePayables associate product director Katie Bush explains, offers streamlined processes to its users.           

Commercial payments 

Can you please walk us through your new commercial payments solution, Virtual Payment Precept (VPP) and discuss the added benefits of control it provides?

VPP leverages existing proven TSYS technology with an improved processing design to deliver secure, virtual single-use accounts in real time. This solution provides enhanced control over account and transactional based parameters.

With VPP, the account number is not pre-assigned. VPP randomly generates a virtual account number that is used to pay for goods and services at the time of need for both single-use and multi-use applications. Authorization parameters allow for the virtual account number to be assigned a ‘specific’ credit limit to pay a ‘specific’ payment. After the transaction is completed the virtual account number has no value, and any additional attempts to use the virtual account number will be declined in the authorization process.

From a security stand point, what benefits does VPP offer to keep a company’s transactions and personal information safe and secure as the sheer volume of payments has fraudsters licking their chops?

VPP generates virtual account numbers at the time of need, ensuring that key account and personal information are not exposed in the payment process. In addition, VPP offers robust account management parameters that can be set at the transaction level to mitigate risk associated with fraudulent transactions. Transaction attempts that do not fall within the set parameters will be declined during the authorization process.

What are some obstacles that arise in this industry from a tech/solution implementation standpoint?

Internal roadblocks such as justifying the cost to implement electronic payment projects and the resources necessary to manage the transition continue to be high on the obstacle list. Obviously this factor is different when you look at organization size. Larger organizations, on average, have a higher penetration of current electronic payment use, anticipate a greater percentage of future use and see fewer barriers to implementation than smaller organizations. Once these barriers are addressed and there is management buy-in for automating the AP functions, organizations can realize sizable benefits such as cash management, increased productivity in the AP department, improved data capture, early-payment discounts and enhanced risk management.

VPP has been designed to address these barriers and make it easier to address sizable market opportunities.

What is the catalyst for nearly 80% of the industry wanting to transition their B2B payments from checks to electronic payments? What is the difficulty and why the lag in that department?

The catalyst for the industry moving to electronic payments is fundamentally a value proposition. Financial institutions and corporate clients are looking for ways to reduce fraud and reduce cost while increasing efficiencies and providing for ease in the B2B reconciliation process.

By leveraging technology, like VPP, financial institutions are able to introduce solutions that remove the barriers to change and provide for ease of adoption of alternate B2B payment types.

Looking ahead, what will it take for the remaining +20% to  transition to electronic payments for B2B transactions?

There are many factors that companies need to understand and educate themselves on relating to the cost/benefit factor of transitioning from check payments. The main roadblock continues to be buy-in from suppliers to accept card payments. As the evolution continues, there are three primary opportunities to add value and remove the barriers to migrating to automated payment solutions and increasing supplier acceptance.

• Trade Terms – The bottom line is that flexibility in trade terms will drive the next wave of growth. To facilitate this growth, we must look at what truly drives these business transactions. Each and every buyer-to-supplier relationship has its own trade terms and flexibility to allow various terms that are transaction driven, and agreed upon, based on the relationship between the buyer and supplier. This is a key factor in increasing adoption of electronic payments.
• B2B Marketplace – Flexible trade terms will be the link that establishes not only the willingness for true B2B marketplace participation, but also drives the environment in which these marketplaces will thrive. This is a completely interactive environment where deals can be constructed with ultimate trade term flexibility and negotiation with maximum efficiency.
• ePayables Harmonization – This entails complete integration with the buyers and suppliers ERP systems to allow 100% visibility from the beginning to end of the supply chain.

As methods of payment continue to evolve, what can companies involved with B2B transactions do to stay ahead of the curve?

As an industry, we need to remain focused on the end user while removing barriers to entry by delivering solutions that provide value throughout the B2B transaction lifecycle – from the purchase order through remittance processing and payment. Technology is transforming the check dominated payment process. Companies will continue to eliminate manual processes that are error and fraud prone and to seek well designed, streamlined processes that enable greater productivity, reduce cost and mitigate risk.