When the digital age gives us the power to make every-day commercial and financial decisions at the touch of a screen, we expect payments to be executed in real time too.
At the retail level, great strides are being made to deliver a truly seamless real-time user experience. In the B2B payments space, the needs and challenges are slightly different, with transparency and security often regarded as important as speed. But the opportunities are no less exciting and transformational – if the industry can work together to put the necessary building blocks in place.
Instant payment schemes such as Faster Payments in the UK have already made payments much easier and faster. More than two billion payments were made by Faster Payments last year, most completed in less than a second. Volumes are predicted to exceed 3.3 billion by 2020, but this means capturing B2B payment flows too, where the pace of penetration has been slower.
Instant payments by corporates and institutions
In a new white paper – ‘Seizing the opportunity; understanding the reality’ – Apply Financial has explored the potential future use of instant payments by corporates and institutions, both in the UK and globally. One of the first obstacles to greater B2B use of instant payment schemes is the present system of value caps (£250,000 in the UK, but lower for some UK banks and national schemes), the widely-anticipated removal of which is expected to unleash a flood of new use cases, including FX payments and request-to-pay functionality.
But, as the report highlights, much more work remains to be done, by regulators, banks, and other payment service providers. First, banks need to upgrade legacy technology platforms and service levels to deliver reliably and consistently on the promise of real-time payments. Second, regulators and the industry need to work together to ensure that the necessary payment security checks – from anti-fraud measures such as account validation to AML/KYC processes such as sanction screening – can be completed without slowing down instant payments. Third, greater interoperability needs to be achieved, both between service providers and national schemes, to pave the way for a global instant payments network. Again, this requires efforts at both the regulatory and industry level, including increased use of APIs, further adoption of open banking principles and coalescence around established standards such as ISO 20022.
B2B demand for real-time payment services accelerates
The retail market has had a head start, but the accelerating evolution of new business models and user requirements mean that B2B demand for real-time payments services will be a key challenge for the industry over the next three to five years. There are great opportunities for those able to grasp them, but also consequences for those left behind.
Validate API enables businesses and financial institutions to verify and cleanse bank payment details, removing processing errors as part of the user journey:
- Automatically check and generate IBANs and BICs from domestic account details.
- Enrich payment instructions with all bank details and standard settlement instructions.
- Check global holiday data to avoid delays.
- Process single and bulk payments.
- Provide up to date global payment rules for compliance.
- Provide Purpose of Payment codes.
Validate API by Apply Financial has saved over £125 million in operational costs for our clients and they’ve never lost a payment.
The API validates international IBAN and BIC codes, and the 24/7 dashboard shows real-time volumes by user, currency and country, showing meaningful stats and figures. Validate is a tool trusted by major international brands and financial institutions, such as HSBC, Barclays, Axa and Easyjet.
Try our Failed Bank Payment Cost Calculator to find out how much your business could be saving in payment errors.