COPENHAGEN, Denmark -- When it comes to cross-border payments, faster may not be better.
During a panel session on cross-border payments initiatives Wednesday at Money20/20 Europe, the conversation turned to what corporate treasurers may be looking for in these schemes. Panelists agreed that speed isn’t paramount in this case.
While real-time payments are the talk of the town these days, Wim Raymaekers, head of banking markets for SWIFT, does not see treasurers being all that concerned about speed. “For a corporate—you’re not likely to pay by your mobile phone with a token,” he said. “The payments come out of your ERP system on invoice, so that’s 30 days. So corporates are not looking for instant payments; they want the certainty and transparency. They want to know that the payment has been made. Risk is what corporates are managing.”
Tom Halpin, global head of payments product management, HSBC, agreed. One area that doesn’t get enough attention, he stressed, is the issues treasurers face in reconciling cross-border payments. “If you actually talk to the corporate world, they have a greater challenge in reconciling the receipt of that payment and making sure that it’s there,” he said. “They can’t reconcile it if you don’t fix the front end, whether that be for consumers or corporates. I think certain changes will be faster and easier, but I don’t see many treasurers walking around with a smartphone and moving money off of that phone.”
Marwan Forzley, CEO Align Commerce said that he sees a disconnect between business users and the infrastructure when it comes to cross-border. “For example, a small business owner finds it really hard to believe that it takes five days to send money to China. It’s also hard to believe that you can track your status on an airplane, you can track your shipment on FedEx, you can track your pizza, but you can’t track your payment,” he said. “But any simple change to that is going to take years to do.”
According to Forzley, the problem is simply the size of the existing infrastructure. The solution then, may be starting from scratch. “When you have new infrastructure that comes along and doesn’t have all the history and all the baggage, there’s a lot more opportunity to actually layer something new then to try and rework what exists,” he said.
Martin Runow, global head of client product solutions, cash management corporates for Deutsche Bank AG, believes that what corporates and consumers are looking for in the cross-border payments space maybe be more aligned than we think. “Corporates are made up of people,” he said. “So there are certain expectations of what corporate treasurers should have.”
Runow noted that while a treasurer might not be completing major transactions with a smartphone, they may want to use their smartphone to track a payment. That consumer mindset, he noted, will drive treasurers’ demands for cross-border payments.