The world of business payments is a complex place, including both recurring and ad-hoc payments to a variety of recipients — vendors, consumers, 1099 contractors and small- to medium-sized businesses (SMBs), to name a few — sent over an ever-expanding number of channels.
These businesses, by and large, are looking to boost the efficiency and digital nature of those payments, particularly a variety of larger enterprises that have been “playing in digital payments for some time,” Lisa McFarland, Ingo Money’s vice president and product chief, told Karen Webster in a recent fireside chat.
A lot of those efforts, McFarland said, have been more or less a way to test and learn, usually with a point solution and often via a single distribution channel, such as an email asking a receiver to click on a link to receive a digital payout. That typically generates a single proof point in favor of digital versus paper check disbursements, which often leads to the desire to add even more digital payout options.
Corporates have quickly recognized that going digital and offering choices becomes an exercise in integrating a lot of point solutions, she told Webster, which becomes much harder than pointing a series of point systems to the back end of their billing and payments systems. Payments have impacts and implications across an entire enterprise, so digital disbursements solutions must work across the entire organization, from the accounting and treasury groups to the legal and compliance teams.
“What many enterprises learned from that [single solution] is that recipients love the experience of being able to receive a digital payment, but the way that [enterprise firms] integrated it was not scalable for their organization,” McFarland pointed out.
It’s one of the biggest reasons that so many corporates now realize that modernizing these ad-hoc disbursements is, first and foremost, about stepping back and examining the cross-functional workflows and the intra-organizational touchpoints that need to be part of the delivery of digital payments and choice, and what business process changes must underpin the efficient delivery of a modern disbursements experience.
“[The enterprise] is starting to take a look at the workflow process and how they can incorporate digital payments choice into more of what they do across all of their channels, their markets and their products,” McFarland said. “I think this is where many enterprises are moving now — but, of course, there's a continuum, and it depends on the industry. But there are industries that are now emerging with more integrated and broadly capable payments capabilities.”
Enabling Digital Payments Choice
When it comes to inbound payments, consumers and even many businesses have a choice about how to pay for the products and services they are buying: cash, check, credit, debit, mobile wallet, etc.
And now, McFarland said, the same thing is taking hold on the disbursement side.
“So, where you saw early adoption and experimentation with push to debit, that has now gone beyond debit cards to include all cards — prepaid cards and credit cards,” she noted. “And then beyond that, to wallets and other payment methods.”
For example, McFarland said Ingo is seeing an upswing in pushes to digital payments channels, including Apple Wallet, PayPal and, increasingly, Amazon Pay. She said that might not be compelling to 100 percent of the recipients that a business will pay, and that a company’s target demographics may impact which payment channels it offers.
But more and more, businesses are realizing they need the ability to push funds to any digital channel, including digital wallets, given the share of both consumers and SMBs using PayPal as a primary account.
“They want to be able to enable that inflow and outflow of receivables and payables in as many places as possible,” McFarland told Webster.
Adopting Instant Payments (and Killing the Batch)
Being able to push a payment to wherever the recipient wants the money to go is critical — but, increasingly, so is the ability to push that payment out instantly.
McFarland said there’s nothing better than when an entity that is due a payment initiates an interaction in person, via chat or on the phone and sees the funds roll into their account before the interaction is even over.
“That's when you have an experience where customers are surprised and incredibly delighted by the entire experience,” she said.
But an instant payment system requires that everything in a workflow happens in real time — which means the batch systems that many firms currently rely on have to go.
McFarland said that many enterprises currently use batch systems as an “instant-ish” payment method, where a payee gets paid the next day via digital transfer. She said that’s an improvement, but not a big enough one.
After all, if something goes wrong during an overnight batch process, that will disappoint the person who’s expecting a payment. Put simply, companies have to ditch batch processing and replace it with a superior instant push payment experience, McFarland said.
“Batch has been a way that companies have been able to experiment, but ultimately, it is a very antiquated way of paying because it completely disrupts the customer interaction,” she noted.
Going Across Channels
Moreover, really making that instant offering work means making it available across all channels in which a business operates. McFarland noted that some channels — web and mobile in particular — are well-equipped to support payment capabilities, but others aren’t. Still, she said that companies must integrate their technological capabilities into “every touch point” where a company interacts with customers, including on the phone or in person.
But to make that happen, corporates need to not just modernize their own processes, but also must support treasury banking partners that are in the process of their own great digital upgrade.
“The treasury bank must be able to provide flexible capabilities that enable them to serve a whole host of use cases,” McFarland said.
Those range from low-dollar disbursements to very high-dollar ones, and from traditional payment methods to digital payments.
“It's a big challenge for treasury banks,” she said.
Getting Started Is Often the Biggest Challenge
The prospect of updating an entire workflow to create a better payment experience can be intimidating, as it can seem like a company has to rebuild its entire business from the ground up. But McFarland said not only is that untrue, it’s not even possible. The goal is to go through the workflow to see what a company can preserve with minimal change.
“You don't have to reinvent everything,” she said. “It's really about finding where there may be gaps, where you've got a process or an internal requirement that may be inhibiting an ability to support a real-time interaction with a customer and a real-time payment to a customer. … If a firm looks at their current process and finds those gaps, typically they can be addressed — sometimes much more easily than expected.”
All in, McFarland noted, going through that workflow is usually about a 30-day process, and the integration side of the task is measured in three or four months. She said the challenge often isn’t getting it done — but just getting started.