2010 Electronic Payments2010 Electronic Payments Survey Results

David BellingerDirector of Payments

Association for Financial Professionals

Agenda

DemographicsBenefits and BarriersBenefits and BarriersPayment Method TrendsEl t i P t P tiElectronic Payments PracticesCross-BorderIndustry Initiatives

Broad industry representation with some

Industry Classification of Survey Respondents

y pconcentration in “Manufacturing”

Business Svcs/ConsultConstruction

Other

Industry Classification of Survey Respondents

S f /T hReal Estate

Non-Profit (incl Ed)Transportation

Hospitality/Travel

H lth S iInsurance

GovernmentBanking/FS

Software/Tech

ManufacturingEnergy (incl Utilities)

Retail (incl Wholesale/Dist)Health Services

0 2 4 6 8 10 12 14 16 18 20%

Survey response skews moderately

Percent of Respondents Distributed by Organization’s Annual Revenues

y p ytoward larger ($1B+) organizations

Percent of Respondents Distributed by Organization s Annual Revenues

30

35%

20

25

5

10

15

0Under $50

million$50-99.9 million

$100-249.9 million

$250-499.9 million

$500-999.9 million

$1-4.9 billion

$5-9.9 billion

$10-20 billion

Over $20 billion

Median = $2.3B

Payment Volume Stats show balance in the

Number of Business-to-Business Payments Made per Month

yU.S. and limited volumes the norm for global

Over

Number of Business-to-Business Payments Made per Month

In U.S. Cross-Border/International

Up to 500

5,001-

10,000

16%25%

5,001-10,000

Over 10,000

,10,000

14%

16% 501-1,000

1,000-5,000

501-1,0001,000-5,000

29%Up to 500

0 20 40 60 80%

Agenda

DemographicsBenefits and BarriersBenefits and BarriersPayment Method TrendsEl t i P t P tiElectronic Payments PracticesCross-BorderIndustry Initiatives

Broad array of benefits supports the drive toBroad array of benefits supports the drive to adopt electronic payments

50%

60%

Top Three Benefits of Sending or Receiving Electronic Payments

30%

40%

50%

10%

20%

30%

0%Cost

savingsCash

forecastFraud

controlSTP to A/P

or A/REfficient

reconWorking capital

Supplier/cust relations

Reduce DSO

Early discounts

But going electronic means resolving

B i t I i U f El t i P t

But going electronic means resolving IT/structural barriers & overcoming inertia

70%80%90%

100%

Not a Barrier

Barriers to Increasing Use of Electronic Payments

20%30%40%50%60%

Minor Barrier

0%10%20%

Major Barrier

At least current laws rules and regulationsAt least current laws, rules and regulations are (generally) not significant barriers

80

90

Legal/Regulatory Barriers to Organizations Moving From Checks to Electronic Payments

%

50

60

70

80

Will the DFA Change This?

10

20

30

40g

0

10

None are barrier

PCI NACHA Rules

Card Network Rules

OFAC Regulation E Other

Agenda

DemographicsBenefits and BarriersBenefits and BarriersPayment Method TrendsEl t i P t P tiElectronic Payments PracticesCross-BorderIndustry Initiatives

Corporates see most success moving major

Payment Methods Used to Pay Major Suppliers

Co po a es see os success o g ajotrading partners to electronic payments

Payment Methods Received from Major Customers

80

90

100

Payment Methods Used to Pay Major Suppliers

80

90

100y j

1st Time Checks < 50%

% %

50

60

70

50

60

70

Wires & ACH Credits gaining

20

30

40

20

30

40g g

0

10

Checks ACH Credits

Wires Purchasing Cards

ACH Debits

0

10

Checks ACH Credits

Wires Purchasing Cards

ACH Debits

2004 2007 2010 2004 2007 2010

Corporates have some success moving other

Primary Payment Method from Other CustomersPrimary Payment Method for Other Suppliers

Co po a es a e so e success o g o etrading partners, but checks still primary

80

90

100y y

80

90

100Primary Payment Method for Other Suppliers

% %

50

60

70

50

60

70

Checks well above 50%

20

30

40

20

30

40

0

10

Checks ACH Credits

Wires Purchasing Cards

ACH Debits0

10

Checks ACH Credits

Wires Purchasing Cards

ACH Debits

2004 2007 20102004 2007 2010

Corporates appear committed to their push to

Lik lih d f C ti M j it f M j S li t El t i P t i 3 Y

Co po a es appea co ed o e pus omove more trading partners to electronic

80%

90%

100%Not Likely

Likelihood of Converting Majority of Major Suppliers to Electronic Payments in 3 Years

50%

60%

70%

80%

Somewhat Likely

20%

30%

40%

50%

Very Likely

0%

10%

2004 2007 2010 2010-Revs Over $1B

Majority Already Electronic

2010-Revs Over $1B

Agenda

DemographicsBenefits and BarriersBenefits and BarriersPayment Method TrendsEl t i P t P tiElectronic Payments PracticesCross-BorderIndustry Initiatives

P t ti id l b i d tPayment practices vary widely by industry

90%

100%

90%

100%

Payment Method by Industry

What they Receive from Major CustomersHow they Pay Major Suppliers

86

60%

70%

80%

90%

60%

70%

80%

90% ACH Debits

Purchasing Cards

Wi

40 7336 40

20%

30%

40%

50%

20%

30%

40%

50%Wires

ACH Credits

Checks32

0%

10%

20%

Manufact Retail Energy Gov Health Tech0%

10%

20%

Manufact Retail Energy Gov Health Tech

Checks32

E-Mail gains ground as “method of choice”E Mail gains ground as method of choice for remittance info.; Others still widely used

60

70

Organization’s Method of Receiving ACH Remittance Information%

40

50

10

20

30

0

10

Email EDI/CTX trans Mail Fax Customer's website

3rd-party website

Org's website Other

2007 2010

More systems integration is supporting the

Integration of Payment Systems with Accounting Systems

More systems integration is supporting the drive to electronic payments, better STP

Integration of Payment Systems with Accounting Systems

80%

90%

100%

60%

70%

80%Neither are Integrated

A/R Only

30%

40%

50%A/R Only

A/P Only

0%

10%

20%

Both A/P and A/R

ACH-2007 ACH-2010 Card-2007 Card-2010

Business payments via card are restricted byBusiness payments via card are restricted by limited acceptance, especially larger buys

Percent of Organizations that Accept Card Payments for Business Customer Purchases

50

60

Size Matters Location M tt

%

30

40

50 Matters

10

20

30

0Small dollar

(e.g. off. supplies)Large dollar

(>$5,000)At POS Phone or Web

StoreSupply Chain

Network

Business payments to employees via cards

C d Utili d t Di b E l P d B fit

Business payments to employees via cards has plenty of room for wider adoption

40

45

50

Cards Utilized to Disburse Employee Pay and Benefits%

25

30

35

40

Focus of EPC

10

15

20

25

0

5

FSA None of Above

Gift/Incentive HSA Payroll Emergency Other

Agenda

DemographicsBenefits and BarriersBenefits and BarriersPayment Method TrendsP t P tiPayments PracticesCross-BorderIndustry Initiatives

Cross-border payments have smaller share

% f O i ti

Cross border payments have smaller share, but broad base of global trade is supported

35

40Manufacturing 100% 

Technology 89

% of Organizations Sending Any Cross-Border % of Total Transaction Volumes Sent Cross-Border

%

20

25

30

Technology 89

Retail 84

Energy 77

Government 56

Health Svcs 38

Nearly 80% Sending Cross-Border Payments

5

10

15 All 78

0None Less

than 5%

5-10% 11-20% 21-30% 31-40% 41-50% More than 50%50%

Wire Transfers currently the dominant

H C B d /I t ti l P t C l t d

Wire Transfers currently the dominant method used for cross-border payments

How Cross-Border/International Payments are Completed

Purchasing Cards

Cross-border ACH/IAT

Checks

Treasury ops in local countries send/receive

0 10 20 30 40 50 60 70

Wire transfers

Payment method decision for cross-border

P i F t D i i H C B d /I t ti l P t S t

Payment method decision for cross border payments is primarily purpose-driven

80%

90%

100%Currency risk

Other

Primary Factor Driving How Cross-Border/International Payments Sent

50%

60%

70%

80%

Transaction costs

Depends on size and purpose of transaction

20%

30%

40%

50% of transaction

Contract requirement

0%

10%

20%

All Respondents Revenues Under $1 Revenues Over $1 pbillion Billion

Agenda

DemographicsBenefits and BarriersBenefits and BarriersPayment Method TrendsP t P tiPayments PracticesCross-BorderIndustry Initiatives

Corporates remain “float aware”, but reduced float in

Impact of Reduced Float from Check Imaging on Migration to E-Payments

ppayments system has supported shift to electronic

35

40

Impact of Reduced Float from Check Imaging on Migration to E-Payments

Less float =

%

15

20

25

30 Less float = Less Checks

No impact

0

5

10

15

Has caused our company to migrate

more quickly to electronic payments

Have converted more payments, but

selectively

Recognize the impact, but other obstacles have

caused our company to migrate

more slowly to l t i t

Checks work well and there is still

enough float to hold off converting to

electronic

Have had no impact on use of checks

electronic payments

Converting Business Checks to ACH Won’t gHappen Unless/Until Concerns Addressed

What impact (if any) would this rule change have on your organization?

Major negative impact

What impact (if any) would this rule change have on your organization?

Minor negative impact

Major negative impact

Somewhat positive

No impact

0 5 10 15 20 25 30 35 40

Very Positive

%0 5 10 15 20 25 30 35 40%

Broad interest in availability of Same-Day

Services Organizations Expect to Use when Same-Day ACH Settlement Services Available

y yACH services

50

60

70Services Organizations Expect to Use when Same Day ACH Settlement Services Available

%

20

30

40

0

10

20

Wire Remittances availability—modest

Impacts of Federal Reserve Enhancement on Organization’s Use of Wire Transfers

Wire Remittances availability modest support for trend to increase use of wires

Impacts of Federal Reserve Enhancement on Organization s Use of Wire Transfers

70

80

90%

40

50

60 Will displace mainly checks

10

20

30

0

10

No change Send more wires vs checks

Receive more wires vs checks

Send more wires vs ACH

Receive more wires vs ACH

Send more wires vs cards

Receive more wires vs cards

Domestic Cross BorderDomestic Cross-Border

Most Corporates Still Skeptical of Mobile, but

O i ti l Pl t I l t M bil P t O th N t Th Y

Most Corporates Still Skeptical of Mobile, but Usage Expected to Rise Over Next 3 Years

60

70

80Organizational Plans to Implement Mobile Payments Over the Next Three Years

%

40

50

60

May be skewed low: ~25% do not get consumer payments

10

20

30

0Initiate Payments Approve Payments Review Payments/Info. Accept Consumer Pmts

Use Now Will Use No Plans to Use

Lack of Awareness is Key Issue for eBAM

No interest

Know very little about it, but sounds interesting

Have evaluated and not implementing

Have an active project to implement

No active project, but likely to implement

0 10 20 30 40 50 60 70

Have already implemented

%0 10 20 30 40 50 60 70%

Questions?Questions?

David Bellinger

dbellinger@afponline.org

2010 Electronic Payment Survey online:http://www.afponline.org/Paymentsg y