Recast your ballot: Does BIP or SIP win your vote?

November 3, 2014 Lynn Larson

Given the various candidates, how do you choose an ePayables solution that will best serve your needs? As with voting in a political election, you do not want buyer’s remorse later. If you think of ePayables as a two-party system, the two major options are buyer-initiated payments (BIP) and supplier-initiated payments (SIP), with possibly some independents sprinkled in. Which one is right for you?

One Provider’s Opinion

I asked Bora Payment Systems LLC (“Bora”), a business-to-business BIP solution provider, about their views. Of course they campaign for what they offer, but they were also quick to point out that the “best” AP system is one that:

matches the needs of the buying organization and
meets any existing contractual terms with suppliers

Bora explained certain end-user (payer) and supplier (payee) attributes that often lend themselves to one option or the other. For example, consider your annual AP card spend (actual or targeted) and the frequency of payments to each supplier.

SIP can be a good choice if annual AP card spend is less than $5 million and there are many non-recurring payments to suppliers. Conversely, BIP is ideal when 10% to 20% of suppliers receive 80% to 90% of payments. Per Bora, end-users who benefit from BIP include healthcare/medical organizations, universities, large corporations, etc.

Read the complete input provided by Bora.

Rock-paper-scissors is no way to decide your payment strategy. Do your research and then demonstrate your support for what best meets your organization's needs.

ePayables In Review

With an ePayables solution, the end-user organization receives and approves a supplier’s invoice through its established processes. In this way, it mirrors a traditional purchase-to-pay process, making it different than a streamlined P-Card process. Following invoice approval, the end-user initiates payment to the supplier through its card issuer/provider, usually by providing a “payment instruction file” or similar. Then, depending on the specific solution (some providers offer more than one), the supplier either:

processes a charge transaction for the approved amount to a designated Virtual Card account number; this reflects the supplier-initiated payment (SIP) option or
receives payment directly through the card rails and its merchant account, which is reflective of buyer-initiated payments (BIP)

Learn more...

What Do You Think?

Do you agree with Bora's input? What else would you add about BIP versus SIP? I encourage you to comment below. Please do not bash a particular provider or solution!

About the Author

Blog post author Lynn Larson, CPCP, is the founder of Recharged Education. With more than 15 years of Commercial Card experience, her mission is to make industry education readily accessible to all. Learn more…

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Refortify your cardholder agreement for added control.

October 21, 2014 Lynn Larson

How complete is your internal agreement that cardholders and their managers sign? Below are eight sample statements, from my P-Card policies and procedures guide, that could be included within a single agreement that covers both roles—cardholder and manager (reviewer/approver).

While most organizations already utilize such an agreement, I recently met end-users who were looking to improve what they implemented when the card program was first launched. Could yours be refortified to improve P-Card program controls? Ensure your legal team and/or human resources department has reviewed and approved it in advance.

The Introduction

Explain the purpose; for example:

Your participation in the P-Card program includes many responsibilities to help ensure the security, health and success of the program. Your signature below represents that you understand your role, and the related policies and procedures, and agree to comply with them.

The Body

Within the agreement, include content about:

who owns the card
who can use it
prohibited purchases
requirements for program participants
ongoing responsibilities
why the card could be canceled
when it must be surrendered
consequences for misuse/abuse

An internal agreement is a common P-Card preventative control.

Definition

An internal agreement is a document that specifies the Purchasing Card-related role(s), associated responsibilities and consequences for non-compliance. The employee signs the agreement prior to card issuance to represent that he or she understands the role and agrees to comply with the requirements.

Eight Sample Statements

Even though a card is issued in an employee’s name, it is the property of [Company].
[Company] prohibits personal purchases on P-Cards.
The cardholder is the only person authorized to use the card for business-related purposes.
You must successfully complete P-Card and any related training prior to card issuance and on an ongoing basis, as described within the P-Card policies and procedures.
You are part of an important line of defense against card fraud. To protect [Company] and its assets, you must follow [Company’s] Information Security Policy and: a) ensure the card is kept secure, along with related account information; b) complete the transaction reconciliation and review process outlined for your role within the P‑Card policies and procedures; c) immediately report a lost, stolen or compromised card.
A cardholder must cease using the P-Card and surrender it upon employment termination or as requested by management.
The program manager, after notifying you, may cancel the P-Card due to insufficient usage.
Violation of company and/or P-Card policies and procedures may result in disciplinary action, including termination. [Company] may also seek legal action in the event of card fraud involving any [Company] employee.

Need additional help with revitalizing your P-Card policies and procedures? Purchase the related guide.

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EMV in the U.S. gets a push from redrawn liability lines.

October 13, 2014 Lynn Larson

U.S. payment card security will get a boost in 2015 with broad issuance of EMV chip cards. Yes, this includes Commercial Cards, too. To learn more, I discussed the ins and outs of EMV with Jack Jania, Senior Vice President, Strategic Alliances, Gemalto Inc., a world leader in digital security.

If you haven’t been following this topic, EMV stands for Europay-Mastercard-Visa and refers to security technology that is incorporated into cards with a smart chip. You will be hearing even more about it from your card issuer prior to the rollout of the new cards.

EMV cards are more secure, reducing cross-border fraud, POS fraud and card cloning.

What EMV Does and Does Not Do

As Jack noted, EMV cards reduce cross-border fraud, point-of-sale (POS) fraud and card cloning. EMV does not shut down all fraud channels, such as online fraud, and it does not encrypt all transaction data. Because POS transactions far outnumber online transactions, the industry has been focusing its security efforts on the POS side first.

EMV Migration in the United States

October 1, 2015, is the target date for converting to EMV in the United States, which has been behind other developed countries in this regard. As an incentive for issuers and merchants, there will be a liability shift at that time. Jack explained that, if a POS terminal accepts EMV cards, but the card used for a purchase only has a magnetic stripe (“mag stripe”), then the card issuer is liable for any fraud. Conversely, if an EMV card, which will still have a mag stripe as well, is used at a non-EMV POS terminal, then the merchant is liable.

What Your Cardholders Will Experience

Because of the added chip, the card will look a bit different, but some cardholders might not even notice. For online transactions, which comprise the majority of P-Card transactions, the process will be the same. A cardholder would enter their card number, expiration, CVV, etc. For in-person transactions, an EMV card could have a PIN assigned to it, which a cardholder would need to provide at the POS. The alternative to chip-and-PIN is chip-and-signature.

Learn More

For more EMV information, read the complete article based on my interview with Jack, including who incurs the cost of moving to EMV and the learning curve that might occur with your cardholders. See also a Q1 2015 blog post on EMV options.

Another payment security development to watch is tokenization, which is what Apple Pay utilizes. It is a form of encryption that prevents account information from being stolen by replacing it with a random token during the purchase process. Clearly, this will be the future of online commerce.