Finding The ‘Big Picture’ In Corporates’ Web Of Payment Infrastructure

Choice is good, and as payment modernization initiatives mature worldwide, corporates now have more choice than ever in how they move money from Point A to Point B.

This is particularly beneficial as companies prioritize their payments modernization initiatives to drive optimization. The way employees should be paid is not necessarily the same way suppliers should be paid; similarly, the way one vendor is paid isn’t always the best way for another.

Though innovation in payment infrastructure and technology has now made it possible for businesses to pick-and-choose which processes and rails are optimized for one transaction, it also means organizations are dealing with a complex web of tools and applications that can create bottlenecks, lost data and wasted time.

Jacob Aruldhas, CEO of ECS Fin, told PYMNTS in a recent conversation that there are plenty of failure points within corporates’ payments flows, whether it be in the way data moves from one app to another or the way payment files are sent and processed by a financial institution.

Overcoming Failure Points

“Payment processing is scattered,” Aruldhas told PYMNTS. “Corporates use multiple systems to accomplish very little in the overall transaction processing stage.”

As he explained, organizations are spending significant portions of their budgets — perhaps millions of dollars — to try and stitch together the many moving parts of payment infrastructures, apps and platforms in-play in the back office to seamlessly move transaction data throughout the enterprise.

As market practices, industry requirements, regulations and bank workflows evolve, so too must corporates alter the way they initiate and process payments. As more apps appear, more fragmentation occurs, as well as more opportunities for a transaction to fail or for something else to go awry.

All of this amounts to a lack of accountability, according to Aruldhas.

“Let’s say payments are moving through multiple systems before they get processed,” he said. “They go through multiple touchpoints, and if for any reason some data is disappearing, nobody becomes aware until a few days later when it hits reconciliation or some kind of cross-checking.”

Optimizing Payment Paths

The practice of batching payment files together and submitting that data to a financial institution is similarly plagued by friction, Aruldhas noted, highlighting the pain points large corporates face when managing a high volume of payment instructions to a high volume of banking partners.

Banks themselves will take weeks to sort through those files and then often provide very limited means to carry out those transactions. Though common, this strategy fails to present an opportunity to optimize transaction routing throughout the growing number of infrastructures available, whether it be through ACH, SWIFT, Ripple, the correspondent banking network or otherwise.

ESC Fin aims to tackle these pain points by, among other services, providing integration services as well as payment technology that can automatically categorize transactions based on stakeholder (salary payments versus third-party payments, for instance), and then optimize the routing of those transactions based on payment rail features like cost or speed.

“It’s the result of looking at the big picture,” said Aruldhas. “All stakeholders can have visibility and control.”

With the global payments landscape evolving so rapidly, it’s difficult for organizations to keep up with integrated infrastructure and intelligent payment processes. Indeed, with more technologies available as options for B2B payments, some rails and workflows may rise to the top, while others may fall by the wayside.

The industry continues to explore the potential for tools like blockchain to address the biggest pain points of the traditional correspondent banking network by bypassing it all together, for example. Though one method may be more optimal than another depending on a corporation and its particular needs, Aruldhas said it’s not up for third-party FinTech providers like ECS Fin to decide for a company which tool to use, but to link business to the capabilities they need to make those decisions for themselves.