Harvard And Capital One Survey Mid-Market B2B ePayments Adoption

When it comes to B2B payments digitization, not every company will experience the same journey. That’s especially true for firms of varying sizes: Whereas large, multinational conglomerates often struggle to make sweeping changes to their complex and siloed internal systems, smaller businesses often lack the resources to invest in B2B payments digitization projects.

Where do middle-market firms stand in this effort to upgrade corporate payments? A new report from Harvard Business Review Analytic Services and Capital One surveyed businesses with revenues between $25 million and $2 billion to explore how they’re embracing electronic B2B payments and what’s holding them back from making progress.

The current picture is quite optimistic: Researchers estimated that roughly half the value of mid-market B2B payments is already digital, with 59 percent of firms reporting the use of electronic funds transfer (EFT) to pay their invoices. In addition, nearly all middle-market firms surveyed have digitized at least some portion of their B2B payments volume.

These companies are taking a “hybrid” approach to electronic business payments, according to PwC Financial Services Advisory Leader Julien Courbe, who was quoted in the report. “It’s not all or nothing. That doesn’t mean you’re cutting the cord with everyone else who is not yet digital.”

Nearly one-third of survey respondents said between 70 percent and 99 percent of their B2B payments value is already digitized. However, the kinds of electronic payment technologies in use, and the use cases for electronic B2B payments, vary.

For instance, while 59 percent said they can make EFT payments to creditors, less than half said they can accept EFT payments from customers. Furthermore, only 42 percent have accounts payable (AP) or ERP software that is able to automate B2B payments, and even fewer have digital portals in operation through which suppliers can submit their invoices. Only 13 percent said they’re using virtual cards.

The most common use case for electronic corporate payments is employee payroll, which is digital for 72 percent of survey respondents. Employee travel and entertainment expense reimbursement processes are electronic among 44 percent, and fewer middle-market firms said that supplier purchases, AP and international payments, and fleet operations are digital.


While the current level of adoption of electronic B2B payments within the middle-market is noteworthy, researchers at Harvard Business Review and Capital One also explored why these mid-market firms are not able to make even more progress and fully digitize their B2B payments.

A few misconceptions may be to blame for the middle market’s stagnation. For example, researchers found that some companies may have a misunderstanding with regard to the costs of paper-based processes.

“Many buyers still issue checks because they think they get more float from the time the payment is in the mail,” explained North Highland Principal and Payments & FinTech Industry Lead Chris Millner, who was quoted in the report. “This is usually not a huge benefit, especially not in a historically low interest rate environment. The benefits from efficiency and payment cost usually outweigh any benefit from float, if there is any at all.”

Nearly one quarter of survey respondents cited the cost associated with digitizing B2B payments as a top barrier for their firms, but, according to the report, assumptions about the cost of this process “may be overblown.” For firms that have already digitized their corporate payments, one-fifth said the initiative paid for itself within a year.

There certainly are legitimate hurdles, concerns and expenses associated with electronic B2B payments adoption: Supplier acceptance, for example, is a key hurdle that must be addressed on an individual, case-by-case basis. Middle-market firms also emphasized the struggle to ensure their ePayment operations are interoperable and integrated with their existing platforms.

However, when it comes to the financial benefits of going digital, some middle-market companies may be lacking the whole picture.

“These objections are not insurmountable,” said Capital One VP and Head of Commercial Card Product Strategy Rajsaday Dutt in a statement, “but it is up to payments providers to take the lead and provide strategic guidance and advice.”