Finexio 101: Finexio Payment Types

Introduction

In today's rapidly evolving B2B payments landscape, businesses are constantly seeking ways to optimize their accounts payable processes. Finexio, the leading embedded payments solution provider, offers a comprehensive suite of payment options designed to meet the diverse needs of modern enterprises. In this deep dive, we'll explore the various payment types offered by Finexio and how they can benefit your organization.

Virtual Cards (vCards)

At the forefront of Finexio's payment offerings are virtual cards, or vCards. These electronic, cloud-based versions of credit cards are revolutionizing the way businesses handle supplier payments.

What is a Virtual Card?

A virtual card is a 16-digit, one-time use card number with a pre-defined expiration date, created specifically for making vendor payments of a specific amount. Unlike traditional payment methods, vCards don't require bank account information for setup or transmission – only an email or mailing address is needed.

Key Benefits of vCards

• ‍Faster Payment Settlement: Virtual cards are issued quickly and delivered electronically, allowing suppliers to process payments immediately and access funds the same day.‍
• Improved Cash Flow: vCards limit the risk of late payments or lost checks.‍
• Enhanced Security: With single-use numbers and pre-set credit limits, vCards significantly reduce the risk of fraud.‍
• Revenue Generation: vCards can transform accounts payable from a cost center into a revenue generator through rebates and discounts.

Finexio offers three methods of vCard issuance

Virtual Card by Email

• Targets strategic suppliers (providers of essential goods or services) through segmentation.
• Requires only a remittance contact email for enrollment.
• A one-time use card number is sent to the supplier's email.

Virtual Card by Phone or Portal (Internal Payments)

• Also targets strategic suppliers through segmentation.
• Finexio's Card Operations Team manually calls or logs into the supplier's portal to make the payment.

Card by Mail

• Targets non-strategic suppliers (e.g., low-value spend) through segmentation.
• A one-time use card number is sent to suppliers via physical mail.

ACH (Automated Clearing House)

Finexio offers both standard ACH and Finexio Express. Finexio Express is an enhanced direct deposit payment option designed to optimize AP spend for suppliers that don't accept cards.

Standard ACH

• Same-day or next-day payment initiation is dependent upon funding method.
• Processing and settlement are governed by NACHA rules and the ACH network.

FinexioExpress

• Cash back opportunities, generating revenue from supplier payment discounts.
• Enhanced security with 24/7 transaction monitoring.
• Rapid payment delivery as early as next day or within 2-3 business days per industry standard.
• 24/7 access to actionable payment data through the customer portal.

Key Benefits of ACH

• ‍Timely Payment Settlement: ACH payments can be processed quickly, often settling within one to two business days once payment is initiated.
• ‍Security: ACH payments are processed through a secure network, which helps protect sensitive financial information and reduces the risk of fraud associated with physical checks.
• ‍Cost-Effective Option for Suppliers: ACH payments are generally less expensive than credit card transactions or wire transfers, making them an attractive option for businesses looking to reduce transaction fees.
• ‍Reliable Digital Payment Tracking: ACH payments provide clear records, making it easier for businesses to track payments and manage their finances and reducing paperwork and administrative work associated with checks.

Drawbacks of ACH

• ‍Processing Delays: Although ACH payments are generally processed within one to two business days, there can be delays for transactions initiated on weekends or holidays.‍
• Lack of Immediate Payment: Unlike vCards, which are typically authorized and settled immediately, ACH payments may take time to clear, impacting cash flow for businesses that need quick access to funds.
• ‍Supplier Reluctance to Share Sensitive Data: Some suppliers may be hesitant to provide their bank account information and other sensitive data in order to receive ACH payments.‍
• Potential for Errors: Mistakes in entering account information can lead to failed transactions or misdirected payments, which can cause frustration and administrative overhead to resolve.‍
• Security Concerns: While ACH payments are generally secure, they are still susceptible to fraud, if proper security measures are not implemented.‍
• Limited Recourse for Disputes: ACH payments can be more difficult to dispute compared to credit card transactions. Once an ACH payment is authorized, it may be challenging to reverse if there is an issue.‍
• Fees for Returned Transactions: If a payment is returned due to insufficient funds or incorrect account information, as an example, businesses may incur fees from their payment provider or financial institution.

Checks

While often considered a traditional payment method, checks still play a crucial role in many businesses' payment strategies. Finexio offers two types of checks:

Physical Checks

• Delivered via mail and can be deposited at a physical bank location, drop box, ATM, or through a remote deposit capture service.

eChecks

• Electronic images of checks that can be printed and deposited in the same manner as physical checks.

Key Benefits of Checks

• Widely accepted form of payment.
• No processing fees for standard check cashing.
• Convenient and easy to use across all U.S. financial institutions.
• Ability to stop payments when in flight.

Drawbacks of Paper Checks

• ‍Fraud Risk: Paper checks are the most fraud-prone payment type. They can be easily altered, stolen, or counterfeited. Additionally, the information on checks, such as account and routing numbers, can be exploited for fraudulent activities.‍
• Security Issues: Paper checks contain sensitive information that can be intercepted or lost in transit. The lack of encryption or other modern security measures makes them less secure compared to digital payment methods.
• ‍High Processing Costs: Paper checks are costly to process. They involve printing, mailing, handling, and depositing, which requires significant manual effort and resources. For businesses, this adds up in terms of labor, supplies, and bank fees.‍
• Error-Prone: Manual processing of paper checks increases the chances of errors, such as incorrect amounts, misplacements, or improper endorsements. These errors can result in additional costs and delays.‍
• Delayed Payment Processing: The time it takes to send, receive, and process paper checks can lead to significant delays. This slow processing can impact cash flow for businesses and individuals, especially when funds are needed promptly.‍
• Environmental Impact: The production and disposal of paper checks contribute to environmental degradation. This includes the use of paper, ink, and other resources, as well as the carbon footprint associated with transportation.‍
• Inconvenience: Writing, mailing, and depositing paper checks is time-consuming compared to electronic payment methods, which are faster and more convenient.

When payment by check is required, Finexio follows the highest level of check security protocols:

Finexio Enhanced Check Security

• Digital Security Pantograph
• Digital Verification Grid
• Anti-Copy Technology
• Microprint Text
• Digital Inkjet Dye-Based and/or Pigment Based Inks
• Original Back Pattern

Wire Transfers

Wire transfers are commonly used for high-value, international, and time-sensitive transactions, where immediate settlement and secure transfer are necessary.

Key Benefits of Wire Transfers

• Wire transfers are offered for same-day processing and settlement, governed by Federal Reserve rules.

Drawbacks of Wire Transfers

• While they provide rapid payment, they are subject to manual processing times.
• Wire transfers may incur higher fees compared to other payment methods.

Payment Timing and Funding Options

Finexio offers flexible funding options, including ACH-Debit and Wire-Debit. The timing of payment processing depends on several factors:

• Funding Method: ACH Debit or Reverse Wire Pull‍
• Payment Type: ACH, Wire, vCard, Check, or Internal Payments‍
• Submission Time: Cut-off times vary by payment type and funding method

For optimal results, Finexio recommends submitting payment files at least 15 minutes prior to cut-off times to ensure timely settlement.

Conclusion

Finexio's diverse range of payment options provides businesses with the flexibility and efficiency needed in today's fast-paced financial environment. By leveraging a mix of traditional and innovative payment methods, organizations can optimize their accounts payable processes, enhance security, and even generate revenue from their payment operations.

As you evaluate your payment strategy, consider how Finexio's comprehensive suite of payment types can help streamline your operations, reduce costs, and drive business growth. Remember, the key to a successful payment strategy lies in choosing the right mix of payment methods that align with your business needs and those of your suppliers.

Additional Resources:

• ‍Check Payments‍
• Card by Mail‍‍
• How to Maximize Virtual Card Adoption