Adopting Real-Time Payments in Business: Challenges, Solutions, and Future Opportunities

Real-time payments are transforming the way individuals and businesses move money. As technology evolves and customer demand for instant gratification grows, many companies are looking to adopt a real-time payment system. However, the introduction of real-time payments is not without its challenges, particularly for corporate treasurers. In this article, we will explore the challenges and opportunities presented by real-time payments for corporate treasurers.

Embedding real-time payment capabilities into existing systems

One of the main challenges of adopting a real-time payment system is the need for new infrastructure, which can be costly and time-consuming. To ease these challenges, some banks are embedding real-time payment capabilities directly into the existing systems used by corporate treasurers. This enables businesses to adopt real-time payments without the need for significant new investment in infrastructure.

Demand is driving behavioral change

Another challenge of adopting a real-time payment system is driving behavioral change. Many businesses are accustomed to traditional payment methods, such as checks or wire transfers, and may be hesitant to change their processes. Mike Jorgensen, the head of emerging solutions for U.S. Bank Global Treasury Management, notes that enough demand is necessary to drive behavioral change. However, the benefits of real-time payments, including faster processing times and increased efficiency, are pushing many companies to embrace this new technology.

Back-office challenges were not mentioned in the survey results

While real-time payments offer many benefits, there are also back-office challenges that should not be overlooked. In a recent survey, back-office challenges associated with real-time payments were not mentioned. However, payment experts note that back-office challenges, such as reconciling payments and managing exceptions, can be significant and must be addressed.

The reach of TCH RTP network is limited due to smaller banks’ uneasiness

Another challenge of real-time payments is the reach of the network. In the United States, the largest real-time payment network in the country, the TCH RTP network, has a limited reach of about 65% of deposit accounts. This is partly due to the unease that smaller banks and credit unions have about participating in a network run by the largest banks.

There is room for innovation in the business-to-business payment space

Despite the challenges, there are opportunities for innovation in the business-to-business payment space. Jorgensen notes that this is an area that is ripe for innovation. As companies adopt real-time payments, there will be a need for new solutions to streamline payments and reduce costs.

Real-time payments offer significant benefits for businesses of all sizes. For example, one corporate client buys used cars from consumers at their homes. Real-time payments enable the company to pay the consumer on the spot, rather than waiting two or three days for a check or ACH payment. This is just one example of how real-time payments can improve cash flow and increase efficiency for businesses.

The ubiquity of real-time payments is expected to grow with the introduction of FedNow

The introduction of FedNow, a new real-time payment network from the Federal Reserve, is set to increase the ubiquity of real-time payments. The network is expected to launch in 2023, and it will provide businesses another option for real-time payments.

The importance of treasury management for real-time payments

As real-time payments become more prevalent, treasury management will become increasingly important. Corporations will need to find ways to ensure they have funds available for real-time payments and manage cash flow more effectively.

The bank’s innovation studio provides a comprehensive payment experience

To help businesses navigate the challenges and opportunities presented by real-time payments, some banks have established innovation studios. These studios can help customers build a comprehensive end-to-end payment experience, leveraging real-time payments to reduce costs and improve efficiency.

In conclusion, real-time payments offer many benefits for businesses of all sizes. However, they also present significant challenges that must be addressed. By embedding real-time payment capabilities into existing systems, driving behavioral change, and addressing back-office challenges, corporate treasurers can take advantage of the opportunities presented by real-time payments to improve cash flow and increase efficiency.

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