If one were to substitute ‘e-payment solutions’ for ‘faster payments’ in the title of this referenced piece, posted in PaymentsSource, the substance of the article would be more clearly aligned. In effect the author is using faster payments as a proxy for existing electronic payments solutions such as ACH and commercial cards, which have been around for decades, as opposed to specific cause and effect from RTP and/or SDA (which of course are now available as well).
‘Given the ever-increasing pace of business operations, faster payments are becoming progressively more important to a company’s bottom line. If you’re still using checks, there are several reasons to consider a shift to electronic payment methods such as automated clearing house or commercial cards, which can meet a variety of business spending needs.’
So we agree with the overall point, which is that businesses should be switching from paper to electronic B2B payments methods. The actual faster payments clearing and settlement systems now in effect in the U.S. have been here for more than two years (SDA credits since Sept 2016 and RTP since Nov 2017), but are not pressuring businesses to change, they simply offer attractive alternatives for various business cases. The pressure for businesses to change is coming from the slow realization that they will be at a competitive disadvantage if they don’t overcome ‘not broken, don’t fix’ led inertia that relies upon paper-based processes, as efficient to a point as they may be.
The author sort of touches on that point in the first couple of paragraphs and then moves into more of a ‘benefits to commercial cards’ dialogue for the remainder of the piece, and we don’t disagree with any of those points, as any readers of our coverage of that space will know.
‘First, the digital systems supporting card programs allow for significantly better data analysis. Real-time spending data can be used to identify expense patterns on a monthly, quarterly or annual basis, which can then be used to schedule payments in advance to ensure on-time payments and to optimize cash flow throughout the year.’
Those readers who wish to know more specifically about what’s happening in actual ‘faster payments’ for B2B scenarios can check out our ongoing coverage, including posted research.
Overview by Steve Murphy, Director, Commercial and Enterprise Payments Advisory Service at Mercator Advisory Group