Another AFP conference has come to an end. According to the numbers, AFP 2017 had the most attendees in a decade. And while the San Diego location undoubtedly was a factor, I believe this year’s strong payments focus was also clearly a key reason why so many financial professionals left the event highly satisfied.
After the multitude of discussions I had with treasury professionals on payments, I walked away with three key takeaways:
· Treasurers mostly view the faster payments push as a positive development—but not by much. Any new payments system carries a cost with it.
· Most treasurers realize that it is time to move away from the old paper check, but this is not going to happen just because there is a new payments system in place.
· Some treasurers actually believe a mandate for faster payments will need to take place for the system to gain traction. But a mandated solution may not provide the best options for corporate end-users.
Thoughts on faster payments
The Payments Roundtable discussion focused mainly on faster payments capabilities and implications for corporates. We had some great speakers come in and provide the base for the discussion. Dan Gonzalez from the Federal Reserve System presented the outcome of the Faster Payments Task Force Final Report, while Charles Ellert, head of payments strategy for Verizon, provided insights on the benefits that a large corporation can potentially reap from faster payments going forward.
As the discussion went on, some very important points were brought up by the corporate participants. Overall, about 54 percent said they view the current faster payments development as being positive, 39 percent were indifferent and 7 percent indicated that they view the current process as being negative. These numbers don’t come as a big surprise to me but pretty much mirror what I hear from corporates generally. Since any change to internal payments systems usually carries a cost associated to it, there is naturally a concern regarding any potential changes to the existing payments rails.
Furthermore, while most corporates realize that it is time to move away from the old paper check, this is not going to happen just because there is a new payments system in place. A new payments system will have to make business sense to corporates. Otherwise it may be easier and cheaper to keep the legacy systems in place.
One of the concerns addressed in the roundtable was the fact that there will not be any mandate requiring changes to the payment systems. Other nations have implemented or threatened to implement these types of mandates for faster payments, while the Fed has opted to allow the industry to take the lead instead. Some participants believe that this will actually hinder actual change to take place. I do agree that the benefit of a mandate is that things will get done, as has been the case in many other countries. At the same time, a mandated solution may not be the best one, and may not include what corporate end-users need from a new payments system.
Other concerns included what the structure of a new payments system would look like, and if it would facilitate adequate space for remittance information. Payments security was also one of the issues discussed, and this is something that the Secure Payments Task Force is working on addressing going forward.
On to next year
Having so many great session proposals helped contribute to the overall success of the conference this year. The window for submitting proposals for next year’s AFP Conference in Chicago is now open, and I’m really looking forward to see what new and fresh ideas will make it to AFP 2018.
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