Many of the corporate payment systems introduced in the past few years have been aimed at large businesses, but Nacha wants to promote the use of the automated clearing house by small companies to send each other money.
Companies with revenue of less than $10 million account for 65% of all payments, according to research commissioned by the electronic payment association. Those businesses remain strongly wedded to conventional paper invoices and checks, according to Julie Hedlund, the group's senior director of business payments. "There's a huge opportunity here in small business."
Nacha has developed numerous ACH payment tools for businesses to process consumer payments. Ms. Hedlund said some of these tools, notably a bill presentment service being tested now, can be modified to handle business-to-business transactions.
George Throckmorton, Nacha's senior director of payment solution technology, said that many large corporations are already using electronic payment systems, such as the venerable electronic data interchange format, to process invoices and payments.
"We think corporate payments are coming along pretty well" when it comes to letting big companies pay one another electronically, Mr. Throckmorton said.
Several major financial companies have introduced payment portals in the past year to facilitate transactions between large companies, and the Federal Reserve Board plans to revise its wire transfer format to include remittance details, making wire transfers more suitable for business-to-business payments.
But even simplified payment automation systems, such as the modified version of EDI known as STP 820, are beyond the reach of small businesses, Mr. Throckmorton said. "We're pretty naive if we believe we're going to force mom and pop to use STP 820."
Ms. Hedlund said Nacha's effort to develop a small-business ACH strategy is still in the very early stages, and is one in a series of projects aimed at making the ACH system more flexible and versatile.
This year alone the clearing house group has begun testing the Electronic Billing Information Delivery Service for business-to-consumer billing, along with the Secure Vault Payments e-commerce transaction system.
The B-to-B initiative could draw on parts of those efforts but is likely to require working with banking companies and vendors on the distinct needs of small businesses, Mr. Throckmorton said.
"Nacha can focus on small business because it is such a specific need," he said. "Corporations are moving faster. We think we can help small business catch up."
Alenka Grealish, the manager of the banking group at Celent LLC, the Boston financial research arm of Marsh & McLennan Cos., said small-business owners often do not want to invest in back-office systems. Many view such efforts only as expenses, not as investments, and they prefer to focus on the products and services they sell to their customers.
Bookkeeping is often deemed a task to be handled after dinner, during the weekend, or by an office manager, she said.
Investing even in a simple accounting package, such as Intuit Inc.'s QuickBooks, is a major change for these business owners, Ms. Grealish said. "It has to be turnkey for the small business. They can't think too hard about it. It can't cost too much money."
Nacha and Celent conducted four focus groups with small-business owners in March, and last month they conducted a survey of 412 small businesses.
"Nacha is not just taking the financial institution perspective of increasing our fee-generating product suite," Ms. Grealish said. "Instead, they are looking very closely at demand. What is the nature of the demand? What are the catalysts required to change small-business behavior?"
Ms. Hedlund said small businesses are willing to change if there is a business benefit, but they are cautious about major changes.
In the focus groups, Nacha and Celent introduced business owners to the concept of "invoice flipping," in which a seller could send a zero-value ACH message to the buyer as a payment request with data fields pre-populated with the remittance information the seller needs, she said.
Nacha is testing a similar approach with Ebids, she said. In that service, consumers receive electronic statements with summary information, including the amount and the due date, along with a link to full billing details on the biller's Web site.
But in focus groups, the business owners objected to the concept of incorporating links into payment tools, because they typically do not have secure Web sites where they could post invoice details.
Nacha is analyzing the data from the focus groups and the survey, which asked business owners about the features they want, such as invoice delivery, dispute resolution, payment reconciliation, and related issues, she said.
Her team expects to present its findings to Nacha's board next month, and by yearend the group plans to have a firm strategy for approaching the small-business market.
Nacha also is working with software vendors to incorporate ACH capabilities into small-business applications, she said, including Intuit.
Dan Wernikoff, the vice president of product management in Intuit's payments unit, said the Mountain View, Calif., company added merchant accounting and card processing features to QuickBooks five years ago, and the vendor has grown to be a top 10 processor in terms of the number of customers served.
"But credit cards are not the right solution for a lot of customers of QuickBooks," Mr. Wernikoff said. "The next thing to think about is how to do that from an ACH standpoint."
Third-party developers have systems that can connect check-scanners to computers and convert the checks to ACH files or clear them as images, while automatically capturing the information for use in QuickBooks, he said. "For us, the long-term problem to solve is how to network the base of customers together."
