SAN DIEGO -- Though corporate treasury and finance professionals have shown considerable interest in adopting faster payments, they need to apply a well thought-out strategy to be successful. During a panel session Monday morning at the NACHA Payments 2018 conference, experts provided tips on how they can do just that.
Tina Giorgio, AAP, president and CEO of ICBA Bancard and TCM Bank, began by noting that “everybody” wants to use The Clearing House’s Real Time Payments (RTP) system, but the implementation process has proven somewhat difficult. This was reinforced by a banker at the session who admitted that he is struggling to implement RTP.
The allure of RTP is obvious; it’s a 24/7/365 system with enhanced messaging capabilities. The latter feature is especially appealing to corporate treasury professionals, who have long sought greater remittance information that transfers immediately.
However, corporates who want to use the RTP network will be at the mercy of banks and solution providers, who need to invest in the supporting infrastructure. That will require building new functionality and capabilities that aren’t currently needed. “It’s something that’s easy to use and easy to work with—once you figure out the integration,” Giorgio said. “That’s going to be the challenge.”
DEVELOPING A STRATEGY
Nanci McKenzie AAP, director of education and innovation, ePayAdvisors, provided tips on developing a payments strategy. She stressed that the first step is understanding what your customers’ needs are, and whether some of the current faster payments initiatives out there apply to them. “As we talk about developing our strategy, I would suggest a market analysis,” she said. “RTP, Same Day ACH and Zelle—those are some of the things that came out of the faster payments initiative and are things that you really need to be considering when you are trying to develop your strategic plan.”
McKenzie added that businesses need to determine their risk tolerance when considering taking on new payment capabilities. She noted that many companies might be hesitant to take on a new payments platform like due to fraud risk. But businesses have been using and continue to use checks, which still have the highest levels of fraud. Fraud will persevere no matter what payment solution is developed. Corporates need to understand that simple fact and then figure out what their risk tolerance is going to be.
“You really should have something in place so that you have an idea of where your risk tolerance lies,” McKenzie said. “All of these things that are going to be out there for us to deal with in the future bring risks along with them.”
Giorgio emphasized that is crucial to make sure that your payments strategy aligns with your corporate strategy. “What delivery channels do you want to participate in?” she asked. “Who are your clients that you’re targeting? And that’s not just your clients of today. Who are your clients of tomorrow?”
When devising a payments strategy, businesses need to evaluate the service they are providing their clients and determine its effectiveness. “Is the service you’re providing important to them, or is it just important to you?” she asked. “A lot of times we put in solutions and find no one wants them. Why? No one asked them; they don’t want it. They wanted something else we’re not doing.”
So as corporates evaluate faster payments systems, whether they’re for their vendors or consumers, it is essential to consider how necessary they are. The payments industry is awash in new technologies, and many of them are very appealing. But corporates need to consider all the variables and make their decisions carefully.