Pay Up

Payment  that last link, that final piece of a supply chain transaction that matters most to suppliers  has largely remained paper-based. This is not by design, however, and enabled technology is beginning to change the way suppliers are paid.


  1. Shop around. The costs to use these payment vehicles can vary significantly. Many of the credit cards developed for the B2B markets are applying consumer-market pricing models to the transactions and charge anywhere from 2 to 3 percent of the transaction, according to Morgan Stanley Dean Witter.


  2. Almost all of these payment solutions are not yet available. The much-heralded Identrus, for example, will not be ready for market until mid-2001. Keep up-to-date about which bank or transport provider, or even competitor, has announced it will participate in a particular network or system.


  3. It's unlikely there will be any one or two dominant methods for the time being (which is small comfort to companies that will have to invest time and money in deciding which system to choose). You can also expect many to die quietly or merge with another company. Most agree a consolidation among the smaller players will happen at some point.

    Rockwell of Trade Compass, for example, says he couldn't "pick a winner right now." Rockwell has been following the developments in this field closely because he eventually plans to build an alliance among several of the major players. "We would like to offer four or five different settlement methods on our site," he says.


  4. There will likely be one dominant "institutional" method sanctioned by the majority of global banks. This is because banks are hedging their bets by forming multiple alliances many of which overlap. A quick look at all the different alliances Citigroup has formed can tell you that.


  5. All of these systems are more exclusive than their marketing materials would have you believe. Your bank almost always has to be a participating member, and oftentimes your logistics and transport provider does too. Fortunately, banks and transportation companies have not been shy about participating in multiple venues.
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