The coronavirus pandemic has some organizations playing payment rails musical chairs in their accounts payable (AP) departments as they adjust payment strategies (and methods) to suit their needs in a volatile, remote working environment.
For many AP teams, the paper check has presented immediate challenges with staff no longer able to step into the office to print and send checks (and no one on the accounts receivable end to accept them).
Today's unprecedented market environment has businesses finally taking the plunge to migrate away from checks as payers seek digitization and payees seek transaction visibility.
Just which payment rail they will migrate to, however, remains unclear.
In a recent conversation with Karen Webster, Boost Payment Solutions Founder and CEO Dean M. Leavitt said the current climate presents the opportunity for B2B payments volume to shift to the card rails, while enabling businesses to access much needed credit at the same time.
“The jury is very much out, but based on the early days of what we’re seeing, this is awakening the realization that the old ways of how businesses pay other businesses just can’t continue,” he said. “This may be a watershed moment, where business will look at their operations through a completely different lens.”
PYMNTS looks at the latest initiatives that reflect how and why corporates and their payment service providers are shunning the status quo and embracing a payment rail switch-up.
Deutsche Enables Faster Payments In Thailand
Deutsche Bank has rolled out a new faster payments service for corporates of its branch in Bangkok, Thailand, recent reports said. The financial institution launched its PromptPay services, with a focus on real-time payment collections for corporates accepting payments within Thailand. The next phase of the service will also enable real-time payments for corporates initiating transactions within the country.
PromptPay is part of Thailand's program to modernize the payments ecosystem and promote financial inclusion, and it is Deutche Bank's third real-time payments platform service within the ASEAN market, which also include Singapore's FAST and Malaysia's DuitNow.
"These platforms help our corporate clients to replace traditional modes of payments such as checks, a trend we are seeing sharply accelerating in the current pandemic environment," said the bank's Head of ASEAN for the Corporate Bank Burkhard Ziegenhorn in a statement.
Visa Enables Commercial Push Payments For KyckGlobal
KyckGlobal recently revealed its collaboration with Visa, which will help the FinTech expand its push payment services for businesses. The functionality means KyckGlobal will wield Visa's real-time push payments solution, Visa Direct, for both businesses and consumers to secure funds in real time to their small business or consumer debit or prepaid card products.
The tool can be used for a range of scenarios, including loan and insurance payouts and incentive programs.
In a statement, KyckGlobal board member Donald Boeding said the collaboration will "unlock real-time payments for countless industries," with the FinTech pointing to the benefits of push payments to enable real-time transactions via the card rails without funds having to be moved via routing or bank account numbers.
NACHA Notches ACH Growth
The most recent figures for ACH adoption released by NACHA were promising, with the ACH Network recording a 7.1 percent year-over-year increase in transaction volume for the first quarter of 2020. B2B payments in particular saw an 11.7 percent increase, notching 1 billion transactions in Q1.
NACHA warned, however, that payment volume across rails and networks is down as a result of the coronavirus and pointed to a slowdown in late March. Still, NACHA noted that ACH transaction capabilities remain an important part of helping the economy continue.
"There are numerous ways in which the ACH Network can help with remote payments," said President and CEO Jane Larimer in a statement.
Exploring Correspondent Banking Alternatives
While corporates are driving adoption of electronic payment rails to manage market disruptions, there are other factors that can drive a shift in how corporates and their payment service providers choose which infrastructure to move money.
In a recent conversation with PYMNTS, Harbour & Hills CEO Rahul Tripathi noted that the company's recent acquisition, which allows it to process B2B payments in China, means the firm no longer has to rely on the traditional correspondent banking system to facilitate cross-border transactions.
"I always say, 'You cannot build your empire on somebody else's infrastructure,'" he said. “Getting correspondent bank accounts is the biggest challenge every payment service provider is facing."