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Visa And SAP Want To Reduce Checks In E-Commerce

Feb 4 2014, 2:13am CST | by

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Visa And SAP Want To Reduce Checks In E-Commerce

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Visa And SAP Want To Reduce Checks In E-Commerce

Corporations, apparently trying to catch up with personal banking, are trying to ditch checks for electronic payments. Visa has announced that it will provide corporations with a way to pay through their Visa Commercial issuer using the SAP Financial Services Network (FSN).

SAP launched FSN, a cloud-based service, at the Swift Sibos conference in Dubai in September as a tool to let corporations which use the SAP ERP system link to multiple banks with only modest development efforts.

Citi’s Treasury and Trade Solutions was the first to provide a direct link to the SAP network; now using Visa, 16,000 additional banks around the world can link to SAP ERP systems with minimal custom programming.

While retail banking customers are depositing checks by taking pictures of them with their mobile phones and using P2P networks, and small businesses are taking credit cards by plugging Square into their smartphones and swiping cards, nearly half of business transactions are still done by checks, according to electronic payment vendors.

Visa said the new solution is expected to help corporations who want to move toward electronic business-to-business payments.

“As companies shift from labor-intensive, paper-based processes to more efficient electronic procurement systems, having the option to pay with Visa will help simplify the process and bring many benefits,” said Edward Fordyce, head of global commercial solutions at Visa. Processing a check for a commercial transaction can cost $100, Visa says.

Sanjay Chikarmane, general manager, information management and Financial Services Network, at SAP, said the integration of ERP and SAP’s FSN will make reconciliation easier and provide better views of a corporation’s cash.  SAP’s ERP systems are installed at 40,000 clients around the world, said Edward Fordyce, who heads up the commercial business at Visa. the accounts payable module in SAP will now be able to initiate payments over the Visa commercial network in addition to using ACH, wire or checks.

“We can take payment instruction files from all of their ERP, but this is important because it embeds us with their new cloud-based solution, FSN. We anticipate that being able to make Visa payments via connection to the SAP Financial Services Network will help corporations streamline accounts payable processing while avoiding the upfront and ongoing costs that would be associated with custom software for the payment process.”

While consumers have readily adopted electronic payments, corporations are a little more reticent to give up checks, he added, in part because for larger payments the costs can be a barrier. Visa is introducing several payment products with different price points, he said. The company will initially target transformational CFOs who play a large role in strategic management at their companies.

“Those CFOs are looking for ways to improve the intelligence they have around the business, and we think electronic payments help that along significantly,” Fordyce said. “If you pay with Visa you can pretty much guarantee good funds the same day, or within 48 hours globally.” He thinks the Visa network has the potential to replace letters of credit in many cases because it can transmit information such as the supplier and invoice data along with the payment.

“We see ourselves competing with  SWIFT in cross-border payments. Where SWIFT and ACH have been attractive is they are typically priced lower than Visa and MasterCard. But last year we introduced a new product that has lower pricing for large dollar transactions. As you marry that with STP, you are now really beginning to deliver value to the buyer and supplier.”

The network is expected to go live this summer. Clients can go to the SAP store and download the Pay by Visa widget, which will be updated as needed to meet the requirements of new SAP releases. For the payables platform, Visa is connecting directly to SAP FSN. Then the 16,000 banks that are on the Visa network can go through Visa to SAP systems.

Source: Forbes


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