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Debunking Common Digital Payment Myths

Posted by PayMotion Marketing - October 11, 2018 in , ,

Paying your vendors by credit card is a proven, reliable way to increase efficiency and security, while decreasing costs and risks. So why aren’t more people doing it?

According to the 2016 AFP Electronic Payment Survey, 68% of large corporations have switched to digital payment methods for most of their transactions, but only 53% of middle market companies have done so.

One major reason for that is the confusion surrounding digital payment methods. In this article, we take a look at the four most common misconceptions about digital payments, and why they might be costing some people a lot of money.

 

Myth: Our Current Process is Good Enough.

Fact: Compared to digital payments, manual processes are less efficient and lack full transparency.

When you pay by cheque, the process takes a lot more time and is much less reliable.

First, someone has to physically write and sign the cheque, which then has to be sealed in an envelope and dropped in the mail. Then it takes several days to reach the vendor, after which they have to process and bank it, then wait for it to clear. If the cheque does not clear, there are additional fees involved and delays in obtaining the money – which the vendor could charge to your account.

That’s not even considering the problems that might occur along the way. What if the cheque is left on someone’s desk and ignored for days or even weeks? What if it gets passed on to the wrong contact at the vendor, or that contact has left the company? The bottom line is, when you pay via cheque, you’re resigning yourself to a long and opaque process.

In contrast, digital payments can be automated, reducing the need for manual labor while increasing consistency. In many cases, you can securely store your payment details on file with your vendor, allowing you to complete future transactions at the click of a button.

You can also get more transparency on your spending, as a digital payments system will maintain a detailed record of all transactions. You can use this data for convenient internal reporting, and to plan out future spending. Many systems will also allow you to export your data directly to your accounting software, further reducing the need for paperwork.
 
Cheque flying around taking a month to arrive at destination - PayMotion
 

Myth: Digital Payments are more Vulnerable.

Fact: Digital Payments offer more robust security than paper systems.

According to the 2018 AFP Payments Fraud Survey, 74% of organizations were exposed to cheque-related fraud in 2017. Meanwhile, only 30% reported being hit by credit card fraud.

Externally, any organization that comes into contact with credit card data is required to be PCI compliant. This is a very strict set of standards which are designed to ensure a secure payments ecosystem for both buyers and vendors. By using a hosted digital payments system, you are essentially partnering with an organization that is accountable for keeping your data safe and secure.

Where internal security is concerned, digital payments offer a number of features that increase your control over the payments process. You can:

  • Manage payment privileges and access to credit card information
  • Access contracts and invoices via centralized document management
  • Generate an automatic audit trail that tracks every transaction
  • Review and approve invoices from your computer, smart phone or tablet

Most importantly, digital payments offer the option of single-use accounts assigned to specific vendor payments. Each account carries a unique 16-digit number, and the credit limit is set to the exact amount of a single payment. This prevents a rogue employee from going shopping on the company’s tab.

So whether you’re concerned about external or internal security, digital payments are the smart choice.

 

Myth: Digital Payments are Expensive.

Fact: Digital payments cost a fraction of traditional chequing expenses.

The 2015 RPMG Electronic Accounts Payable Benchmark Survey found that the average cost of a traditional cheque payment was $31 per invoice, while a digital payment only cost $9. Interestingly, out of the businesses whose suppliers offered early payment discounts, more than half continued to receive those discounts after switching to a digital payment system.

The fact is that paying by cheque often results in many direct and indirect costs, such as:

  • Low-value administrative labor
  • Paper and printing supplies, cheque stock, and postage
  • Losses due to human error and/or fraud
  • Sub-optimal working capital management

Switching to digital payments can eliminate many of these costs, and replace them with a single, streamlined payments platform at a relatively affordable fee.
 
Money flying out of persons pocket - PayMotion
 

Myth: Digital Payments are Complex to Setup & Maintain.

Fact: Most companies only need a simple, turnkey digital payments solution.

For many CFOs and controllers, the very idea of implementing a digital payments system seems daunting. Based on their past experience implementing other on-premises financial systems, they assume the process will be extremely lengthy, and more painful than pulling teeth.

But the truth is that cloud-based payments systems have made things a lot easier. Today, only large corporations really need a tailored solution with a host of complex integrations. For most independent businesses, a hosted, turnkey solution is more than sufficient to meet their needs.

These out-of-the-box cloud solutions can typically be implemented fast, and they don’t require much of your company’s IT resources during the onboarding process, since the provider does most of the heavy lifting. There really isn’t anything to “deploy” or “roll out” – it’s simply a matter of making a few simple adjustments to a pre-existing platform.

For these reasons, a hosted digital payments solution will reduce complexity in your organization, not increase it.

 

Switch to Digital Payments Today

While the chequebook might be handy to keep around, just in case, the fact is that going the digital route is ultimately more effective and resource-friendly.

If you’re looking to cut costs and increase efficiencies in your business, you might want to take a hard look at your company’s current payment process. It might be the most financially rewarding thing you do today.

If you have any questions about adopting digital payments to your business operations, the PayMotion team would be happy to help!

About the Author

PayMotion Marketing

We love sharing our expertise in online payments and helping our customers succeed. From the technical team to our customer service team, everyone at PayMotion is ready to support your success. Our goal is to reduce your expenses and risks while optimizing your revenue, by managing your online payments for you. The PayMotion payment solution is there to keep your payments in motion, so you don’t have to.

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