In the ever-evolving financial landscape, treasury teams are focusing on payments modernization to enhance cost and operational efficiency. A recent treasury survey reveals that payments automation is a top priority for treasury teams in 2023, with 82% considering it ‘very’ or ‘extremely’ important. Here’s how treasury teams can approach payments modernization:
1. Embrace Real-Time Payments: Real-time payments, especially through the RTP network, are gaining prominence. They offer instant payments at a fraction of the cost of wire transfers. The introduction of the FedNow Service is expected to further expand the accessibility of real-time payments. Implementing this requires modern treasury systems, API integration, and robust controls to ensure accuracy.
2. Consider All Payment Options: Treasury teams should explore a range of payment alternatives, considering factors like settlement speed, payment types, and transaction costs. This approach ensures that each payment is processed at the optimal cost and pace, aligning with specific use cases.
3. Prioritize Security and Fraud Protection: Real-time payments are irrevocable, emphasizing the need for stringent security measures and robust fraud protection. Instant confirmations and the ability to include additional payment-related information make real-time payments secure and efficient.
4. Influence from B2C Payments: B2C payment experiences, such as Zelle and Venmo, are influencing B2B treasury workloads. These technologies expedite transactions and create seamless customer experiences. While B2B payments require tighter controls, the trend of easier payment processes is making its way into B2B treasury operations.
Payments modernization offers a range of benefits, including faster settlements, improved cash flow, convenience, reduced errors, and lower costs. Even in challenging budget environments, modernizing payment systems and processes is a sensible move for treasury teams.
