DENVER -- Treasurers only see a real need for faster payments if they pertain to high-value transactions. This was the view from Sunday’s Payments Roundtable, sponsored by Vizant, at the 2015 AFP Annual Conference.
With NACHA’s same-day ACH system coming soon and the Federal Reserve’s Faster Payments Task Force regularly brainstorming on how to speed up U.S. payments, faster payments are top of mind for many corporate treasurers. But just because they’re thinking about them doesn’t mean they want or need them.
“How much demand are we going to see from consumers and corporations for faster payments?” asked said Angie Grunte, executive vice president with Vizant. “And what is that going to cost in order to implement those efficiencies? What it’s really going to come down to is whether the cost is worth it for corporations and consumers.”
Anita Patterson, CTP, director, treasury services and Patriot Act compliance officer for Cox Enterprises Inc., said that first, we need to define what “faster” really means when it comes to payments. “I bet if I took a poll in the room, we would probably have 100 different opinions of what faster is,” she said. “It all depends on whether you’re send or receiving and if you’re a consumer or a business. So one thing we need to decide as an industry is, what does ‘faster’ really mean.”
Patterson also touched on some the problems treasurers are having with NACHA’s Same Day ACH initiative, which she stressed is not a panacea, but simply another tool for treasurers to use. “There’s a lot of fear from the banks that same day ACH is going to erode the wire system,” she said. “Well no, it’s not, because most of the wires are done because they need immediate settlement. They need to make sure that it’s settled and it can’t be pulled back, etc. It’s usually for a closing or an acquisition. You’re not going to send a same day ACH for that.”
Patterson noted that the problem treasurers are having with same day ACH is that it’s low-level. “I think a lot of us corporates wanted it to be a higher level than what it actually is,” she said. “That’s going to be a problem. We can’t use it for our daily settlement wires. You can’t replace those.”
Patti Ritter, CTP, CPA, senior treasury operations manager at Republic Services, added that same day ACH was likely kept low to keep wire transfers alive and kicking. “I think that was built in,” she said. “The banks didn’t want to cannibalize the wires, so they made sure it was going to be used for lower-dollar value payments. So for my company, we’re going to take a wait-and-see on it and see how it develops. From a business standpoint, I don’t need a same day ACH as badly as maybe an insurance company does. I think it really comes down to the business needs.”
Irfan Ahmad, vice president, healthcare payments at The Clearing House, whose organization is also in the process of establishing its own real-time system, agreed with Patterson and Ritter. He noted that The Clearing House has not yet set a ceiling for payments like NACHA’s $25,000 limit for same day ACH. “I wouldn’t be surprised if we started somewhere close [to $25,000],” he said. “But one thing we’ve heard repeatedly is that if we start there, we cannot stay there for long. Corporates want the capability to use something like this, and they want to be able to have it for dollars that they’re going to use.”