Direct deposit vs. checks: payment platforms evolve with technology.

• Author: Barbour, Tracy
• Position: FINANCIAL SERVICES - Company overview

Banks and credit unions in Alaska offer an array of solutions that businesses can use to send payments to employees, suppliers, and other entities. Credit cards, ACH (commonly referred to as direct deposit), and wire transfers are some of the most commonly-used electronic options. Credit cards come in a variety of forms to facilitate different requirements for payment processing. For example, companies can use a traditional credit card to make purchases in person, as well as over the telephone. Another option is a non-plastic "ghost" card that vendors keep on file and simply punch in the card number whenever a purchase is made. However, some companies are uncomfortable with the potential liability of having their card number kept on file. That's when a single-use card number can be useful. "The customer still has to go through the invoice process, approving that invoice and having that payment approved to be paid," says Jason Kim, a Wells Fargo treasury management consultant based in Anchorage. "Then Wells Fargo facilitates a payment to that vendor using a secured email."

As a built-in safety measure, the single-use number can only go through for the exact amount the customer specifies, and the customer receives an email with all the pertinent details about the invoice that was paid.

Businesses can use credit cards to capitalize on a wide range of benefits. A smaller company might take advantage of consumer-style credit card that offers rewards and allows the customer to carry a monthly balance. A corporate purchase card, on the other hand, can be a great tool for companies with multiple employee-users, but it normally doesn't come with a rewards program.

However, it enables customers to enhance the way they pay their suppliers. They can use the card to purchase goods and services, except there's no roll-over balance. At the end of the month, the customer has a certain number of days to pay the balance due.

Credit cards give corporate buyers leverage to make timely purchases and take advantage of lower costs.

ACH Options

Some suppliers prefer to avoid paying the extra fees associated with accepting credit cards, so they opt to use ACH. However, there are inherent risks associated with ACH. The vendor can get paid as a next-day settlement, but there is always the potential of a return.

In addition to being used to pay vendors, ACH is often used for direct depositing payroll, tax payments, employee reimbursements, and employee child support...