Payments are the final step in the trade processing cycle. With significant effort spent on the initial stages of accounts payable processing that includes invoice receipt, organizations must not fail to exchange payments in a timely and cost-effective manner. Electronic payment methods allow processing in a faster, cheaper, and more convenient manner than paper-based cheques.

Relevance to trade facilitation

Today's payables and receivables processes are still primarily manual, non-integrated and inefficient. The purchase-to-pay process has long suffered from inefficiencies inherent in manual, paper-based processes, including lack of visibility and control over financial transactions, unavailability of timely information and high processing costs. Buyers suffer from the high cost of paying via cheques, but suppliers also face the issue of lost cheques and missing or insufficient bank reconciliation detail.

Another factor ensuing from inefficient manual operations is the lack of visibility and uncertainty of cash flows, which represent a source of major concern to suppliers. The pressure from buyers to extend payables terms and the consequent uncertainty around the payment process pose another challenge for trade suppliers. Suppliers, who have limited access to capital, often have to rely on high-cost financing methods like factoring to fund their working capital and improve their cash positions. The cost of financing can be significant to suppliers, which in many cases is passed on to the buyers in the form of a higher price of traded goods and services.The implementation of electronic payment (i.e., e-payments) methods is not widespread. The use of cash and checks is still very entrenched in trade business. While developing countries are timidly launching programmes to introduce this advanced form of payment, other more mature trading countries have recently seen widespread adoption of e-payments, also due to the implementation of regulations and technologies for e-signature. It is advisable, therefore, for developing nations to learn from the experiences and practices adopted by more trade-savvy countries as good guidelines for the developing stages of their own journey to e-payments.


Depending on the type of electronic payments tools and technologies adopted by an organization, it can achieve the following tangible benefits:

  • cost reduction from reduced personnel, lower administrative expenses, and decrease in printing and mailing costs,
  • reduction in the amount of paper consumed by an organization, especially with the use of purchasing cards to remove purchase orders and invoices from the equation,
  • compression of the procure-to-pay cycle resulting from the reduction in mail and cheque float,
  • increased ability to capture early payment discounts offered by suppliers due to shorter processing cycle times,
  • improved visibility into payments and overall spending, translating into better cash flow forecasting and risk management abilities,
  • speeding up of the payment process of customs duties and taxes,
  • reduction in losses incurred resulting from cheque fraud, theft of pre-printed cheques and data entry errors, and
  • positive impact on the environment from going "green" as a result of migrating from cheques to electronic payments.

Further trends

Online e-payments for e-commerce activities and payments for goods and services using mobile devices (m-payments) are expanding across the globe. In general, e-payments are currently more viable in developed countries, which have the Internet infrastructure and penetration that emerging markets lack. This has accelerated growth, in particular in online retail purchases. M-payments are gaining most traction in emerging markets, where they represent a cost-effective and secure medium for various types and sizes of cashless payment transactions, and provide access to financial services to those without banking facilities. E- and m-payments have been "hype" issues for some time now. New entrants and non-bank competitors, in particular, have been eager to provide these new payment types. However, these are not basically new methods of payment, simply electronic versions of the traditional payment methods. The e/m-functions make it easier to initiate and control payments independently of time and place. Credit transfers can easily be made using PCs or mobiles. The payment card information in the magnetic stripe or chip of the traditional card can also be stored in a secure part of the PC or mobile. The basic difference from traditional payments services is that these are completely electronic and can be efficiently integrated with customers' own systems.


Useful reading includes the publication from Deutsche Bank on "e-Invoicing-final step of an efficient invoicing process"