AutoRek, an end-to-end payments reconciliation platform, recently conducted a global payments survey. It is aimed at understanding real-time payments (RTP) in the UK and U.S. RTP are an emerging payment system, and with that comes concerns around regulation, compliance and reconciliation. With rising demand from consumers for RTP enablement, the payments industry has been scrambling to meet the need. According to the Global Payments Lead at AutoRek, Nick Botha, 2022 was a turbulent year for both UK and U.S. payments.
According to the AutoRek survey:
- 70% of U.S. payments firms are confident in their ability to accommodate RTP
- 50% of UK firms feel prepared to accommodate RTP
- 60% of all firms expect payment methods and volumes to increase in the future
Can Automation Bridge the Gap?
PaymentsJournal spoke with Botha in a webinar last month. They explored how automation could help prepare businesses to accommodate emerging payments. Automation enables businesses to bridge the gap between front-end and back-office processes to monitor payments, accurately reconcile, and remain compliant against regulation. Botha shared as the digital payments space grows, so do regulation measures. It is critical for companies to evaluate their current processes and determine where their payment reconciliations are weak.
The AutoRek survey discovered that 65% of payments firms currently utilize spreadsheets for accounting. 75% of U.S. firms utilize spreadsheets and 50% of UK firms utilize spreadsheets. This poses the organization at risk for regulatory breaches, dependency of skilled persons to manually populate spreadsheets, and in inflexibility to meet new regulations as they come to the surface.
According to the AutoRek survey:
- 63% of payments firms agree their regulatory burden will increase by 2024
- This is especially prominent in the U.S.: 47% of US respondents foresee compliance expenditures increasing and only 29% of UK firms anticipate spending more on compliance
- Among regulatory topics, customer protection, operational resilience, crypto payments and overall data protection were ranked as the most important for regulation
- 29% of U.S. firms noted that their back-office costs grow in tandem with payment volume growth
- This is in direct contrast to UK firms who state that their back-office costs grow at a slower rate than payments volumes
- UK firms have a wider adoption of back-office automation
Real-Time Payments Regulations
It does seem ironic that the UK feels less prepared to accommodate RTP (on average) but has a better grip on compliance than the U.S. This could be due to harsher existing regulations in the UK than in the U.S. Botha noted that his “payments report has demonstrated clear differences between UK and U.S. regulatory landscapes, strategic priorities, and future outlooks.” U.S. firms need to invest into and enable automation to support RTP regulations that are guaranteed to come. It’s not if, but when.
Overview by Sophia Gonzalez, Research Analyst, Debit Advisory Service at Mercator Advisory Group.