B2B Payments

Why Treasurers Aren’t Into Real-Time Payments

The hype over real-time payments is strong among consumers, but for corporates, enthusiasm is a bit more muted. A survey from TD Bank released last year found that, for corporate treasurers, mobile solutions and self-service tools are more important than instant payments, with 47 percent of survey respondents reporting that real-time payments are not essential to their positions.

The EuroFinance Corporate Treasury Network has just released a new report, “The future of payments, a corporate treasury perspective,” in conjunction with SWIFT that may offer deeper insight into corporate treasurers’ position on faster and real-time payments.

According to a survey of 300 treasury professionals at companies around the globe, less than half want to be able to make instant payments. For companies with a turnover of between $1 billion and $10 billion, interest in real-time payment capabilities is highest at 44 percent. But for businesses with turnover greater than $10 billion, interest sits at 40 percent.

Smaller companies have treasurers with even less interest in real-time payment capabilities (at 25 percent).

According to analysts, the data doesn’t suggest corporate treasurers don’t want real-time capabilities in other areas of their professions, however.

In fact, the majority of professionals surveyed across business sizes want real-time payment tracking. Companies with turnover less than $1 billion are most interested in this capability (75 percent), though companies with turnover between $1 billion and $10 billion, and firms with turnover greater than $10 billion, each show that about two-thirds of respondents want real-time payment tracking too.

Disinterest in FinTech Overall

Corporate treasurers don’t just lack interest in gaining real-time payments capabilities. Treasurers aren’t interested in using alternative financial service providers and FinTech players either. According to the survey, the majority of treasurers across company sizes have no plans to adopt FinTech, largely citing concerns over security and fraud protection.

Only 4 percent of companies smaller than $500 million are using at least one FinTech service provider. Adoption of FinTech remains below 15 percent for both companies between $1 billion and $10 billion and companies greater than $10 billion, the report found.

More than half (55 percent) of all survey respondents said they had no plans whatsoever to use alternative finance providers for cross-border payment services, and only about a fifth said that while they are “considering using” alternative players for this service, they aren’t using them yet.

Most treasurers (61 percent) said standardization and automation are their top priority if they were to choose an alternative payment service provider other than their bank, followed by traceability of payments (44 percent) and compliance with regulatory obligations (39 percent).

According to the report, companies have a “long and impressive shopping list” of demands from their financial service providers, “and it is a stark illustration of the true barriers to entry for these new players.”

“Clearly change is possible and new technologies have disrupted companies, markets and sectors that believed they were safe,” the report stated. “However, to succeed, not only do new entrants have to deliver this set of products and services better than the incumbents; they have to do [so] while those incumbents continue to improve their own products and services.”

According to analysts at EuroFinance and SWIFT, FinTechs are struggling to convince large companies to let go of their well-established solutions and service providers and make a change. In this regard, banks have the upper hand.

“This is one area in which the banks truly benefit from the level of regulatory oversight they endure and from their scale,” the report stated. “They have more stringent standards to meet, and they have much greater resources to ensure security than almost any other kinds of company globally.”

Banks’ clear win over FinTechs to gain the confidence among corporate treasurers — both for their ability to remain compliant and provide services that enable protection against fraud — could mean larger corporates will continue to lag in adopting real-time payments.

“Banks and payment platforms have essentially argued that no one either needs or is demanding real-time payment and have asked, ‘Why would anyone need this? What they need is certainty of payment on a particular day,’” the report stated.

Indeed, with so many treasurers demanding real-time visibility into payments, but not necessarily real-time payments themselves, the data suggests it is unlikely corporate treasures will suddenly shift to FinTechs that are offering real-time payment services.

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New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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