The new service called Visa Commerce has the potential to save companies billions of dollars annually by greatly simplifying the procurement process, says the company.

According to research conducted by the Gartner Group and Visa, 86% of all B2B payments are currently made using paper cheques, while only 11% of companies find cheques or cash to be an efficient form of payment.

"Visa Commerce is the 'missing link' that adds electronic payment and information management to the procurement process," says Rob Stansfield, executive vice president of commercial solutions at Visa USA. "By filling this void, Visa Commerce will help make true B2B e-commerce a reality."

Visa Commerce represents an entirely new model in commercial payment, he says. It allows the buyer to determine when to initiate electronic payment, defer settlement of the payment based on pre-established terms with suppliers and transact the type of B2B payments needed in today's procurement environment in any amounts up to $10 million per transaction.

Importantly, says Stansfield, Visa Commerce does not replace procurement software services, enterprise resource planning (ERP) systems, or other payment products like Visa Purchasing cards.

The system eliminates several expensive, paper-based steps in the payment and reconciliation processes, such as sending payment requests and paying by cheque. Buyers receive enhanced transaction information, the ability to receive electronic payment requests from suppliers and other cash management services that can be customised by their financial institution. For suppliers, Visa Commerce allows online payment requests, immediate access to the status of payments online, acceptance of electronic payments, easier transaction reconciliation and enhanced transaction information.

The package is comprised of three major components - a Member-branded payment account, an optional Web-based user interface that simplifies the payment process and a secure technology platform supported by VisaNet.

"Unlike many would-be B2B payment providers, Visa already has a proven, reliable payment infrastructure and decades of experience in the electronic payments business," adds Stansfield. "To date, no other providers have successfully created a payment system that can serve as a global standard. Visa has the global technology infrastructure and unparalleled core competencies in the payments business to be the standard setter in this category."

Visa Member financial institutions are expected to begin piloting Visa Commerce in the coming months, says Stansfield, with general release of the service scheduled for 2003.