‘Instant credit transfers will be appealing to corporates’

Faster, more streamlined, harmonised and digital-oriented. Those are and will be the trends in the coming years in the international payments market, according to Etienne Goosse, Director General of the European Payments Council (EPC).

The international payments sector is changing dramatically due to European legislation and digital innovation. SEPA and the launch of new payment methods are making their mark on the payments landscape and will have significant impact on corporate treasury, Goosse says.

With these trends in mind, what can corporates expect in the next five years concerning international payments?

‘We see an increasing offer of mobile payment apps, including apps for corporates. Furthermore, the new SEPA Instant Credit Transfer (SCT Inst) scheme will make instant euro credit transfers an appealing payment method for corporates. The SCT Inst was published by the EPC in November 2016, and will enter into effect in November 2017. This payment scheme will allow the transfer of money in Europe, initially up to 15,000 euro, in less than 10 seconds, 24/365. In the coming years, we expect the maximum amount per transaction to progressively increase. This method will be even more appealing to corporates when the maximum amount is raised. In addition to being highly convenient, the availability of funds in real time will help to optimise their liquidity management.’

How will further harmonisation take place?

‘The increasing integration of payments in SEPA is evidenced by the new obligation for SEPA scheme participants to accept at least the EPC’s Customer-to-Bank SEPA payment messages. This means that as of November 2017, corporates will be able to initiate all their payments the same way, across SEPA, and with every Payment Service Provider (PSP) they use. Initiating payments will therefore be more harmonised and convenient for corporates which transact in various SEPA countries or with different PSP partners. Electronic invoicing is also an area where harmonisation will be enhanced in the coming years. Finally corporates can expect ISO 20022 – the payment messaging standard – to be increasingly widely used, which will also contribute to a greater harmonisation of payments at the international level.‘

What will be the impact of PSD2 and the Interchange Fee Regulation (IFR)?

‘Generally speaking, the impact will be rather limited for corporates. For example PSD2 regulates a practice – the fact that corporates regularly have to gather and consolidate all their payment account information in a single view – something which many corporates were already doing. As for the IFR, it is expected to reduce the cost of card acceptance, which can lead to significant savings for corporates which heavily rely on card-based payments.’

Will new technology companies take over payments business from traditional banks?

‘It would be wrong to compare the world of traditional PSPs to the one of tech companies, and think that innovation lies only on the tech companies side. With challenging regulations like PSD2, combined with the new SCT Inst scheme, banks can prove they can innovate and propose user-friendly, digital-oriented, fast, and cost-efficient solutions to their customers. There is a lot of talk about tech companies, and FinTech start-ups, entering the payment market. But when it comes to their money, customers are risk-adverse, and prefer to entrust their payments to well-established organisations. The same goes for corporates. In addition, we observe that traditional banks and FinTech start-ups are increasingly collaborating to offer the best of both worlds to their customers.’

How can corporate treasurers prepare themselves and their organisations for all these changes?

‘Corporates need to keep a watchful eye on the current and predicted developments in the payment space. Their PSPs are at their side to help them stay up to date with everything that is going on in this space. Above all, I would recommend corporates to formulate their own holistic and long-term vision of how payments should be managed in their organisation given the major impending changes in the payments landscape. And not to deal with each and every payment transformation as it comes, separately and on a reactive basis.’

As Etienne Goosse states, it would be recommendable for corporate treasurers to formulate a long-term vision of how payments should be managed in their organisation given the changes in the payments landscape.