A supplier payment network is a network that paying companies and their suppliers both join, so that invoices are paid electronically instead of by cheque. It is also called a B2B payment network, where B2B means business-to-business.
The problem it solves is mainly an American one. In the United States, many companies still pay their suppliers by paper cheque. A cheque is slow, it costs money to print and post, and it can be stolen or altered. Each supplier also has to give its bank details to every customer separately. And when a payment arrives, the supplier often does not know which invoices it is for.
A network solves these problems. Each supplier joins once and gives its bank details to the network, not to every customer. Each paying company joins too. When the company's accounts payable (AP) automation software approves an invoice, it sends the payment through the network. The network moves the money electronically to the supplier's bank account. It also sends the remittance advice. Remittance advice is a note that lists which invoices a payment covers. The supplier's accounts receivable (AR) automation software uses this note to mark the right invoices as paid.
Take, for example, a supplier of machine spare parts that sells to 300 companies. Say one customer pays four of its invoices, worth ₹6,20,000 in total. Without a network, the supplier might receive a cheque with no detail, and an employee must work out which invoices it covers. With a network, the ₹6,20,000 arrives in its bank account with a list of the four invoice numbers. The AR software marks all four as paid, with no manual work.
India has a different starting point. Indian companies already pay suppliers electronically, through NEFT and RTGS, the bank-to-bank transfer systems. They usually upload a batch file to their bank, or send the money through payouts. So in India, the main problem is not cheques but matching each payment to its invoice. That matching is a kind of reconciliation.
India also has TReDS, the Trade Receivables Discounting System, a set of RBI-approved platforms where a small supplier can sell its unpaid invoices to a financier. That is a form of invoice discounting, not a payment network. But it connects buyers, suppliers and banks in a similar way.