B2B Payments

Weighing Faster Payments Opportunity And Risk For Corporates

New faster payment initiatives are popping up around the world, from Saudi Arabia to Brazil to Australia. In the U.S., accelerated transaction is gaining speed, too. According to the latest PYMNTS Faster Payments Tracker, Same Day ACH volume has seen a 24 percent increase year over year between the first quarter of 2018 and the first quarter of 2019.

As faster and real-time payments gain traction in the U.S., corporates are quickly finding opportunity with new accelerated transaction capabilities: 82 percent of businesses said real-time payments can resolve many of their existing payment challenges, the Tracker noted. With collaborations emerging to drive faster payments adoption, corporate treasurers are in the crosshairs of these initiatives.

Among the most recent partnerships announced in this context is a tie-up between treasury management solution provider Kyriba and JPMorgan Chase. The two entities recently announced an initiative that sees Kyriba deploying JPMorgan’s API to connect joint customers to real-time payments, making Kyriba the first treasury platform to offer real-time payments for corporations.

These developments follow previously announced initiatives from SWIFT and Citizens Bank in connecting corporates to faster payment capabilities: SWIFT announced it would open its gpi platform to blockchain companies to support faster cross-border transactions, while Citizens said it would launch real-time B2B payment capabilities for its corporate customers this year.

It’s not just the largest enterprise and treasury departments weighing their opportunities in faster payments, though.

As the Faster Payments Tracker noted, the gig economy is also quickly embracing payments speed to accelerate payments and payouts to freelancers.  According to a recent PYMNTS survey, financial issues remain one of the largest reasons for taking on gig work in the first place. Yet, financial challenges can complicate this career path, with PYMNTS data finding that only 51 percent of gig workers are paid within one week of completing a job — and only 17 percent of freelancing platforms offer real-time payments as a choice for gig worker payments.

Acknowledging the challenge of faster payments to gig workers can present an opportunity for employers of all verticals and types.

“Employers that do not use faster, modern payment methods risk losing workers to competitors,” the Faster Payments Tracker concluded.

However, faster payments adoption has introduced new challenges for corporates, too.

Citi recently launched two new tools, aimed at addressing the need for treasurers in a real-time payments ecosystem to target fraud in real time, too. The first is the Citi Treasury and Trade Solutions’ (TSS’) Verify Identity solution for treasurers, enabling U.S. corporates to deploy GIACT’s real-time identity verification platform to verify identities before the transaction takes place.

More recently, Citi TSS announced Payment Outlier Detection, a tool for treasurers to more accurately and quickly identify anomalous transactions before they are cleared. The solution, announced this week, was designed to accelerate and automate fraud detection as more treasurers deploy real-time transaction capabilities. According to the financial institution, faster and real-time payments add extra challenges to fraud detection, a burden that will only grow as faster payments adoption increases.

The banks that service corporates and their treasurers will be faced with similar challenges in fraud detection and risk mitigation, which Western Payments Alliance (WesPay) President and CEO Bill Schoch recently told PYMNTS will “present a really significant change, and, in some cases, disruption to the way FIs are processing payments today.”

Last year, research from Aite Group found financial institutions are struggling to agree on how to best offer faster payment tools to their business clients.

“It’s a lot more than just saying, ‘I’m now going to offer this.’ There’s legal, there’s risk, there’s compliance, there’s operations, there’s implementation, [there’re] so many aspects,” said Aite Group Senior Analyst Erika Baumann in an interview with reporters at the time. “At this point, banks have to get away from the high-level strategy to start actually digging in, learning from the early adopters and, as an industry, coming together to ramp up that volume.”

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The September 2019 AML/KYC Tracker Report provides an in-depth examination of current efforts to stop money laundering, fight fraud and improve customer identity authentication in the financial services space.

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