Communications of the acm

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56
June 2007/Vol. 50, No. 6
COMMUNICATIONS OF THE ACM
tronic B2B payments. Here, we investigate the B2B 
e-payments industry and the technologies that will
shape the future of B2B transactions. 
Historically, the paper check has served as the key
settlement method for financial transactions between
businesses in the U.S. market. However, evolving tech-
nologies have created new
possibilities within the
payments supply chain.
To date, the fastest-grow-
ing sector of the electronic
bill payment market 
is business-to-consumer
(B2C) transactions. For
instance, 2003 marked the
first year that the majority
(53%) of in-store con-
sumer payments were
conducted electronically,
according to a 2005–2006
study of consumer-pay-
ment preferences by the
American Bankers Associ-
ation and Dove Consult-
ing. Similarly, from 2001 to 2003, automatic
e-payments and online bill payments increased from
17% to 29% of the consumer bill payment mix [3].
Businesses have been less aggressive in their adoption of
e-payments. As of 2001, 86% of B2B payments in the
U.S. were still executed through paper checks, with the
remaining 14% using a
variety of e-payment
options (see Figure 1)
[10], a percentage that has
changed little in the ensu-
ing years. 
Industry research into
e-payment trends sug-
gests a near-term increase
in B2B e-payment vol-
ume [5]. The rationale
behind this transforma-
tion lies with improve-
ments in e-payment cost,
timeliness, and reporting
accuracy relative to paper checks. The 2004 Check
Clearing for the 21st Century Act, also known as
“Check 21,” is indicative of the changing business
mind-set regarding e-payments. Check 21 legalized
the substitute check, or a check printed from an elec-
tronic image of the original check. The legislation
allows financial institutions to process payments
more efficiently because electronic check images can
be transmitted electronically. Although Check 21
technologies may be a minor process enhancement,
they still rely on manual intervention and provide lit-
tle in terms of the cost of processing a payment to the
extent provided by a true e-payment process. True 
e-payment systems con-
tinue to evolve as an
attractive solution
because they allow
bundling of payments
with related transaction
data, along with integra-
tion of accounting and
enterprise resources plan-
ning systems. This means
that businesses expend
fewer financial and
human resources process-
ing payments, reconciling
payments with invoices,
and entering information into databases. 
According to a 2000 study conducted by the
National Automated Clearing House Association,
companies in the U.S. pay from $2 to $5 to create and
deliver a single paper-based invoice. Another $10 is
spent on the other side of the transaction for process-
ing and payment [4]. Estimates suggest that a typical
large business, sending approximately 792,000
invoices per year, can save nearly $5 million per year by
eliminating costs related
to processing paper pay-
ments [9]. In light of
these potential savings,
business executives are
starting to recognize the
value of moving to an e-
payment solution [12].
The result is that approxi-
mately 61% of all B2B
payments in the U.S. are
forecast to be conducted
electronically by 2010 (see Figure 2) [5]. 
Four main challenges confront businesses interested
in adopting e-payment processes: systems integration;
the absence of remittance standards; security; and
uncertainty in the return on investment; in addition,
candidate technologies must be considered in light of
their ability to deliver value in multiple dimensions. 
Systems integration. 
The most daunting barrier 
to the adoption of e-payments is a lack of integration
across the many systems needed to support the process