Even amid the widespread digitization of business operations, many companies still use checks to make B2B (business-to-business) payments. But paying and accepting more than one payment method — especially digital payments — is a better approach.

Sellers can boost customer satisfaction by letting buyers choose how to pay, and buyers can manage cashflow and reduce costs by strategically using different payment types. Each payment type has its own pros and cons, so businesses should weigh these when choosing which to use and accept.

Checks

Paper checks remain the most common method of B2B payment. The 2022 AFP Digital Payments Survey found that 33% of B2B payments in the U.S. and Canada continue to be made by check. That percentage has fallen only slightly since then — to 32.2%, according to a report by eMarketer. Many companies are reluctant to give up checks for multiple reasons, but consumers’ demand for convenience and the increasing automation of AP and AR processes are pushing them away from paper. The many disadvantages of checks include:

• Checks must be handled manually, increasing the risk of errors and costing time and money. 
• Check payment cycles are lengthy — as long as 14 days — negatively affecting DSO (days sales outstanding) and cashflow.
• Checks are expensive, with a median per-transaction cost of $2.01-4.00, according to the 2022 AFP Payments Cost Benchmarking Survey. 
• Among all payment methods, checks are the most vulnerable to fraud. As evidence, 65% of respondents to the 2024 AFP Payments Fraud and Control Survey Report reported that their organizations have experienced check fraud. 
• Checks lack finality. Payers can cancel or stop payment on checks, or the checks themselves may come from an account with insufficient funds.
• Checks are also subject to reporting requirements for Unclaimed Property, which adds to the administrative burden on the issuer.

Paper checks do have advantages. For example, they are always traceable, and the lengthy processing time allows buyers to float cash.

ACH

The most commonly used alternative to checks is ACH (automated clearing house), a U.S. system of transferring funds electronically between two bank accounts. The ACH system is governed by Nacha, the National Automated Clearing House Association, which sets the operating rules for the various types of ACH transactions. ACH payments: 

• Can take a few days to process and settle but are far faster and more efficient than checks. They can even be automated to occur at regular intervals, typically for low-value transactions.
• Have a median processing cost of $0.40, according to the 2023 AFP Payments Guide, ACH: What Corporates Need to Know — far less than checks and most other payment methods.
• Cannot be executed 24/7. Per Nacha rules, ACH processing has a daily cut-off time, since transactions are processed in batches several times a day. 
• Are easy to track and appear on month-end statements, helping businesses to manage cash flow and settle accounts.
• Can be rejected for insufficient funds or refunded by request two days after the recorded transaction date.

While standard ACH transactions can take several days to clear and settle, Nacha has introduced same-day ACH for both credit and debit payments. They cost a bit more than regular ACH and must be initiated during three designated “windows” for same-day processing, since ACH payments are handled in batches. 

eChecks

Also run through the ACH system are eChecks — direct, digital debits executed using the same information included on a paper check presented at the point of purchase (POP), converted via a lockbox (ARC), or converted in a central back-office (BOC). Nacha oversees the rules for eChecks, which are set by Regulation E (“Reg E”), the federal regulation governing electronic payments.

EChecks have many of the same advantages and disadvantages that ACH payments have over checks:

• EChecks are much faster than paper checks, with a median turnaround time of two to five business days. 
• They are far cheaper than paper checks and offer digitally-enabled convenience to buyers.
• They are impossible to misplace, and bad actors cannot steal them. But fraudsters can take a check and create counterfeit debits using an eCheck.
• They can be reversed, but no later than five business days after settlement, making them irrevocable if later deemed to be fraudulent.

One disadvantage of eChecks is their degree of finality; like paper checks (and ACH), they can be returned for insufficient funds.

Wire transfers

Wire transfers are another proven B2B payment method. They are typically used for lower-volume, time-sensitive, high-value transactions, many of which are international. Wires are mainly executed via the Federal Reserve’s Fedwire and CHIPS (the Clearing House Interbank Payment System) services. CHIPS is operated by The Clearing House, a banking association and payments company owned by the largest commercial banks. 

Wire transfers are:

• Confirmed upon receipt and immediately available once they land in the payee’s account. 
• Expensive — the median cost of initiating a wire transaction ranges from $10.01-15.00, according to the 2022 AFP Payments Cost Benchmarking Survey.
• Among the least secure of all B2B payment methods. Because they are fast, high-value and final, they are a popular target for fraud.
• Final — once settled, they cannot be reversed and are irrevocable.

Moreover, wires cannot be automated.

Commercial cards 

One of the most popular B2B payment methods among buyers, commercial cards are credit cards for businesses. Commercial card transactions are processed through card networks like Visa and MasterCard, while card issuers — typically financial institutions but sometimes American Express or Discover — approve or deny the transaction. Commercial card transactions: 

• Take an average of one to five business days to post.
• Have high processing fees for suppliers, but these fees can be offset by per-transaction surcharges to buyers.
• Are one of the most secure payment methods. They are not linked to buyers’ bank accounts, and card issuers can alert cardholders of suspicious activities. Some even allow cardholders to lock down their cards. Buyers can dispute transactions and avoid paying until the dispute is settled (if not in their favor). 
• Enable businesses to manage spending by placing limits on purchases, types of purchases, amounts and users.
• Lack the finality of most other payment types because payments can be disputed and reversed.
• Typically give buyers rebates or rewards points — hence their popularity on the buy side.
• Can be easily tracked at month-end with an electronic or paper statement.

Commercial cards come in an even more secure form: virtual cards, which are digitally generated 16-digit numbers that can be used in place of the physical card. The number can only be used once, and its use can be limited by parameters like type of purchase, length of validity and dollar amount. Virtual card transactions are associated with a regular credit card number in a business’s account, allowing all card transactions to appear on one statement in each billing cycle.

Real-time payments

Relatively new to the payment scene in the U.S. are real-time payments, which are processed through The Clearing House’s RTP network or the Federal Reserve’s FedNow service. PYMNTS.com reports that RTP currently serves 65% of all demand-deposit accounts in the U.S. According to the 2023 AFP Real-time Payments Survey, by 2028, over three-fourths of organizations expect to use real-time payments to both send and receive payment transactions. Real-time payments:

• Completely eliminate payment delays. As such, they not only improve cash flow and efficiency, but also enhance customer satisfaction and potentially provide a competitive edge.
• Have lower transaction costs than many other, slower payment types, with a median cost ranging from $0.01-2.50, according to the 2022 AFP Payments Cost Benchmarking Survey.
• Are final and irrevocable. They cannot be reversed — leaving no room for errors.
• Are easy to track.
• Have advantages and disadvantages when it comes to security. Their speed makes it difficult to detect fraud without advanced fraud solutions, but also gives bad actors little to no time to attempt fraud.
• Require system development that some businesses consider onerous and cost-prohibitive.

Digital payments for the win

While each payment method has its own pros and cons, adopting digital payments — in any form — is essential for businesses to remain competitive. Digital payments are faster, cheaper, and more efficient than paper (see table), allowing companies to better manage cash flow and optimize working capital. They are more secure and less susceptible to errors from manual handling. Most enable businesses to set up recurring billing and automate payment collection. They are easy to track and provide invaluable customer data. And they offer far more finality of settlement than checks. 

In short, businesses gain substantial efficiency, save costs in multiple ways, and transact more securely by using digital payments. They simply need to choose the right ones for their customers and business — strategically. 

Costs and payment cycles of various payment types

TYPE	TIME TO SETTLEMENT	FINALITY	MEDIAN PER-TRANSACTION COST1,2
Checks	Up to 14 days	Can be canceled or “bounce” for insufficient funds	$2.01-4.00
ACH	2-5 business days (unless same-day ACH: 1-2 business days)	Can be returned/charged back within two business days	$0.40
eChecks	2-5 business days	Can be returned/charged back within 5 days	$0.26-0.504
Wire transfers	From minutes to one business day (cross-border: 1-5 days)	Final and irrevocable within same day	$10.00-15.00 (initiating and receiving)
Commercial credit cards / virtual credit cards	1-5 business days3	Can be reversed or disputed	1.5-3.5% of transaction total (cost of acceptance)5
Real-time payments	Instant	Final and irrevocable	$0.01-$2.50

 

1. 2022 AFP Payments Cost Benchmarking Survey
2. 2023 AFP Payments Guide, ACH: What Corporates Need to Know
3. Experian, “How Long Does It Take for My Credit Card Payment to Post?”, January 17, 2024
4. Versapay.com, “What Is an eCheck? Your Guide to Understanding How Electronic Checks Work,” May 21, 2024 
5. Forbes.com, “Credit Card Processing Fees (2024 Guide),” updated March 7, 2024