International sales increased an even faster 30%. The company also reported a record profit of $857 million during the second quarter and accelerated expansions ...
Arlington Computer Products, which provides computer hardware and services to businesses, is receiving payments faster from customers by using the new AribaPay online payment service through the Internet-based Ariba Network, Arlington says. It was the first company to receive payment via the new service.
Arlington Computer Products Inc., a provider of I.T. products and services, is looking forward to getting more of its customers to pay invoices online through AribaPay, a new online payment service offered by the business-to-business portal Ariba Network, Arlington executives say.
Arlington, the first company to accept payments through AribaPay during a recent beta test of the service, has found that it provides significant cost savings over other payment methods while also making it far easier to process and track invoices, Tom Turkot, Arlington’s vice president of client solutions, says.
“We are going to actively promote AribaPay to our customers,” Turkot tells B2Bec News. “The more customers we get on AribaPay, the less fixed costs we’ll have.”
Arlington Computer Products, a privately held company based in the Chicago suburb of Buffalo Grove, IL, is still participating in a beta test of the payment service, which Ariba, a unit of business software company SAP AG, is offering in a joint venture with credit card company Discover Financial Services Inc. AribaPay is expected to become commercially available in the second quarter of this year.
Buyers and sellers that set up contracts on the Ariba Network will have the option to settle payments through AribaPay, using Discover’s global payments network to complete transactions. The Ariba Network has more than 1.5 million suppliers and 2,000 buyers. The cost per transaction to sellers is “less than 1%” of transaction value, says Robert Mihalko, Ariba’s vice president of seller marketing. There are no set-up fees, he adds.
Turkot, however, says the per-transaction fee comes out to “less than one-half of 1%.” Compared with the cost of processing checks—the most common payment method used by Arlington’s customers—the new service will save Arlington about $5 per invoice, or about $10,000 per month, he says. The savings will come largely in not having to spend employee time processing paper checks and invoices, he adds. Arlington does about $100 million a year in revenue, the company says.
Although Turkot says he doesn’t expect AribaPay to necessarily increase the speed at which customers pay their invoices, he says the system makes it easier and faster to reconcile invoices and payments. “It makes our information more consistent and accurate,” he says. “We’re not re-sending copies of invoices or troubleshooting missed payments.”
Industry analysts were more skeptical, however, regarding the long-term value to companies of having access to a single online payment system in AribaPay. Duncan Jones, a vice president and analyst covering procurement systems at Forrester Research Inc., says it would be better if companies on the Ariba Network had access to more than one online payment system. “Then market forces would determine if [AribaPay’s less than] 1% is the right level of fee,” he says. Ariba hasn’t said whether it will consider offering other payment options, but hasn’t ruled it out. “Our roadmap does not currently include any other services,” a spokeswoman says.” But as with all of our solutions, we will evaluate the need for additional offerings based on the needs and demands of our customers.”
Turkot, however, says he’s satisfied for now with AribaPay’s payment fee structure. He notes that another value that AribaPay offers is the ease of implementation—it took less than a day for Arlington to set up over a Webex conference call with Ariba, he says. He also sees value in being able to transact payments with the thousands of companies that use the Ariba Network and parent company SAP for accounting and other business software.
Moreover, Turkot figures that, sooner or later, accounting software providers will build their own links to multiple payment networks, including AribaPay and alternative payment systems such as Traxpay and MasterCard, which is developing a separate payment system for companies that transact through the Basware Commerce Network.
For a free subscription to B2Bec News, click here.