Customer expectations surrounding payments have changed. Gone are the wait times and here are the times of instant gratification, confirmation and the frictionless payment. "The same way you send a text or an email, a payment should be made in that time span as well," said Jeff Horowitz, managing director and market head for relationship management with BNY Mellon Treasury Services.
At the recent AFP 2018 conference in Chicago, professionals gathered to discuss payment trends, opportunities and challenges they faced.
Migrating to ePayments
Cal Slabicki, director and product line manager, immediate payments with BNY Mellon Treasury Services, spoke about the benefits of ePayments. "You don't want to think about just the payment process. You have to think about everything supporting that process." He went on to explain that for corporate clients, there were significant concerns around the communications chain related to each payment. This need for payment-specific information is the motivation for businesses to make the transition to ePayments.
By shifting to ePayments, even as longstanding as ACH, there's an improved customer experience and a decrease in manual costs. New payment technologies like Real-Time Payments (RTP), the new payment rail The Clearing House built that allows for payment processing 24/7 and 365 days a year, and digital payments network Zelle are also revolutionizing the way businesses can approach a shift to ePayments.
Consumers are buying globally, but the methods of payment a merchant might accept domestically aren't necessarily the methods of payment customers from foreign countries want to use.
–Rene Pelegero, president of Retail Payments Global Consulting Group, LLC
While businesses are well-versed in ACH processing and paper check payment clearing, RTP is the first new payment rail brought online in more than 40 years. It's expected to innovate the ways businesses pay one another and communicate payments to and from their customers while improving the overall consumer experience with payments. With benefits including immediate confirmation and payment certainty, The Clearing House hopes to enroll 50 percent of banks by the end of 2018.
When asked, experts spoke to the desire to adopt more ePayment solutions, yet both were concerned about the processing costs. “We don't want to increase costs, but we do want the information-rich payments," said Frank D'Amadeo, director of treasury operations with Consolidated Edison Company of New York. "The objective over time is to have our B2B customers come over to an electronic payment rail."
Global Payment Integration
The common consensus was that the United States is playing a game of catch-up when it comes to utilizing faster payment technologies. With over 200 new methods of payment introduced around the world, this means that merchants and banks are struggling to keep up with these new consumer-preferred ways to pay.
"Consumers are buying globally, but the methods of payment a merchant might accept domestically aren't necessarily the methods of payment customers from foreign countries want to use," said Rene Pelegero, president of Retail Payments Global Consulting Group, LLC..
This customer behavior means that businesses who want to expand their global reach need to establish a roadmap for broadening payment acceptance and exploring more ways to let their customers pay.
The onus, therefore, falls on merchants to broaden their payment acceptance and explore the ways their specific customers want to pay. This requires an understanding of the current payment marketplace and the emerging opportunities that will give merchants and B2B the leg-up when reducing payment costs and increasing both acceptance and customer satisfaction.
To help businesses broaden acceptance, there are multiple emerging payment channels and payment strategies.
While RTP transactions are currently limited to $25,000 and enrollment capabilities are still limited by participating banks and AP systems update costs, this system holds promise for both consumers and businesses with settlement capabilities inside 15 seconds. International payments are also a future possibility when integrated with the ISO 20022 format.
Additional capabilities like those emerging in blockchain APIs were also of note. Blockchain payments come powered with the ability to attach payment instructions directly to a payment, reducing query times and increasing payment efficiency. APIs are widely used throughout numerous sectors and are continuously improving connectivity between banks and customers to speed payments.
"We've hit a turning point where RTPs are real, and clients are using it. Go out and get educated, learn what's out there, and talk to both your bank and your peers in the industry," said Slabicki. D'Amadeo offered insight on how to bring the true power of RTPs and other faster, information-rich payments to full fruition. “Get Treasury a seat at the table with customer service," he said. This way, companies are building what customers truly want, not just what they think will work best from a technology standpoint.
To help businesses navigate the global payments space most efficiently, Pelegero advocated for these two steps:
- Develop a roadmap: Businesses can map out both countries of importance and methods of payment to guide their future payment integration efforts.
- Stay abreast of payment market developments: Leverage partnerships and professional network to keep track of new methods of payment and vendors that can help bridge the gap between where you are and where you want to be in global payments.
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