Real-time Payments and Paying on Time

Banking And Financial Messaging

Gareth Priest Photo copy

Gareth Priest

Oct 22, 2020

Back in 2019, the results from the Payments Barometer indicated that the adoption of real-time payments for regular payments was likely to rise. Based on the 2020 Payments Barometer, this appears not to be the case. Claimed usage among the decision-makers we spoke to remains flat (53% of decision-makers in 2019 and 50% in 2020 told us they are using real-time payments regularly).

What could be holding businesses back? One potential answer is that businesses are not using real-time payments to their fullest potential. Many of those we surveyed indicated their companies use real-time payments to fulfill routine requirements such as paying regular invoices from suppliers (48%), paying taxes (46%), or making payroll payments (45%). The post-COVID-19 climate places increasing pressures on liquidity, so this lack of adoption in real-time payments may continue to be a trend. The well-known expression “cash is king” is proving more vital during the Covid-19 pandemic than at any other time in the last 30 years, even during the Global Financial Crisis of 2007-8.

Moreover, the sentiment that real-time payments come with real-time fraud problems has surfaced in some quarters within the payment industry. Organisations may feel they have no time to reverse or detect Authorised Push Payment (APP) fraud or human error for that matter. This fear may lie behind why some businesses are not considering real-time payments to service more general outbound payments needs. Fortunately, there are regulations in place and automated solutions available to help companies verify payments on the fly, which helps to address this concern.

Similarly, late payments continue to be a big issue – an area where instant, real-time payments have huge potential to help. In this year’s Payments Barometer, 89% of decision-makers told us their businesses continue to pay suppliers late. This result is only a slight improvement compared with 2019, where 92% of decision-makers confirmed they had paid late. Late payments can have a massive impact on businesses, especially in times of crises like the COVID-19 pandemic when smaller players can ill-afford delayed payments.

Concerningly, 26% of decision-makers in small businesses in 2020 said this is something they have had to do, up from 19% in 2019. Given the numerous payment methods available, the Prompt Payment Code, ‘Duty to Report’ legislation and sensible business practice to maintain continuity of supply, there is no reason why small businesses should be placed at any additional risk from larger corporates hoarding cash reserves. Which does beg the question of whether larger corporates can effectively create an ethical and sound supply chain management program? A limitation easily remedied using real-time payments. Encouragingly, 67% of current real-time payments users note that it helps them with cash-flow management and can unlock cost savings.

Real-time payments and paying on time will become even more critical following the fall-out from the COVID-19 pandemic. The new world order is likely to look very different. Organisations may find themselves in survival mode and fulfilling payments difficult for some. Watchdogs will need to ensure big corporates do not purposely withhold payments, making real-time payments a crucial avenue for seamless connectivity and honouring of payments.

In a bid to generate cash-flow, organisations may need to look to their customers who also might be cash strapped. Companies will require a cost-effective and flexible way to chase payments while still cultivating positive, long-term relationships with customers. Request to Pay will offer just that, helping to facilitate paying on time.

Launched by Pay.UK in early 2020, Request to Pay is a messaging service that allows billers to send a request for payment rather than an invoice or a bill. For each request to pay, customers can either pay in full, pay in part, ask for more time, communicate with the biller, or decline to pay. It’s an agnostic payment method and different to direct debits. A request to pay can result in an immediate push payment, whereas a direct debit has a static upfront mandate.

Request to Pay comes with extensive benefits like reduction in costs, better customer service, improved cash-flow, and a reduction in fraud incidence. It also supports improved reconciliation and provides better and more immediate information about transactions. With this raft of benefits, it’s no wonder that two in three (64%) decision-makers are already aware of Request to Pay, with awareness levels growing to three in four (72%) amongst decision-makers in enterprise organisations. Given the importance of protecting cash-flow, awareness of the Request to Pay initiative looks set to increase in the coming months.

2020 Business Payments Barometer

To see all of the results revealed by this year's survey, including responses about real-time payments the top drivers of payments, download the full 2020 Business Payments Barometer.


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Gareth Priest

Gareth Priest is the Chief Product Officer at Bottomline leading product strategy across the Bottomline portfolio of global solutions. He is responsible for the product vision, innovation, design, development, and management of Bottomline’s market-leading solutions spanning the business payments and cash lifecycle. With more than 20 years tenure at Bottomline, across EMEA and North America, Gareth’s experience also includes general management, strategic product management and global corporate development for payments, digital banking, and fraud and financial crime solutions. Gareth has held general manager and product management leadership roles with ACI Worldwide and Checkpoint Security Services Ltd.

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