The potential for EBPP to dethrone cash and checks as the predominant means of B2B payments has not been lost on some of the largest players in payments technology development, namely the ACH networks, MasterCard and Visa U.S.A.  The National Automated Clearing House Association (“NACHA”) Council for Electronic Billing and Payment (“CEBP”) recently published the second in a series of papers on B2B EBPP, in which it reviewed various available online and offline B2B payment options.[1]

 

Each of the EBPP systems leverage on some aspect of the existing payments processing systems.  The basic B2B ACH payment uses the cash concentration and disbursement (“CCD”) option, which does not permit any accompanying remittance information.  ACH also permits certain other transaction formats that can contain varying amounts of accompanying information.  These include CCD with addenda (“CCD+”), where up to 80 characters of information formatted in ANSI ASC X12 can accompany the funds transfer, and the corporate trade exchange (“CTX”) application, which permits very extensive addenda records, i.e. 9,999 records of up to 80 characters each.  Enhanced ACH applications use the same ACH networks and settlement systems, but incorporate additional messaging capabilities for related transaction information.  This may be particularly attractive to businesses that have already invested heavily in EDI infrastructure, as these enhanced ACH capabilities, such as CCD+ and CTX, usually can be implemented with little additional expense and within familiar operational, technical and legal environments.  ACH permits both debit and credit transactions.  It may be buyer/sender initiated credit transaction in which the buyer/sender initiates a payment order in favor of a seller/receiver.  This is likely to be the dominant form of B2B ACH transaction.  Businesses are less likely to want to use seller/receiver initiated credit transactions, which flow in the reverse direction and result in withdrawals from buyer/sender financial accounts.  EBPP using ACH requires either a written agreement or other understanding between the buyer and seller authorizing the use of ACH and providing for the exchange of account and financial institution information.