When the Faster Payments Service was launched in 2008, its central purpose was simple: to enable money transfers at close to the touch of a button, ramping down payment times considerably.
Yet, approaching nine years since its introduction, adoption rates of the initiative for corporates can best be described as mixed.
This was underscored in Bottomline Technologies’ second UK Business Payments Barometer report, in which 44% of financial decision-makers surveyed claimed their business had adopted the service; 41% said they hadn’t, while the rest of the respondents were not sure if it was even in place.
Notably, of those shunning adoption, 53% said their main reason was that they had no need for faster real-time payments.
“I think it has a lot to do with the DNA in some account departments that making faster outbound payments is a bad thing for cash flow,” explains Ed Adshead-Grant, General Manager, Payments at Bottomline.
“But underneath it’s a different story in terms of customer service, reconciliation, and visibility around cash management. And even if you use Faster Payments, you can still schedule and diarise payments to best fit your needs.”
According to Adshead-Grant, such confusion only serves to highlight the need for greater education for finance departments if they are to take full advantage of the industry investments. The same goes for regulations such as the proposed Payment System Regulator (PSR) changes, the introduction of Open Banking in the UK and the Payment Systems Directive II (PSD2).
Despite their potential to significantly impact on the payments industry, they were listed by respondents in the latest Bottomline survey as some of the least prevalent change drivers in the next 12 months.
“There is an opportunity to take massive advantage of regulatory change, but I think the perception around compliance is quite negative. People tend to ask whether they really need to do this stuff,” he says.
“But beyond all those acronyms, proactive corporates have the chance to gain real-time access to multiple accounts, which can only make their decision-making even sharper and better. This comes down to education, and asking how these rules fit in with better, tighter, more secure treasury operations.”
Does a slow adoption of Faster Payments and lukewarm reception of new rules suggest the payments industry is in danger of falling out of step with a rapidly changing economy? Adshead-Grant agrees that the sector needs to catch up with the rise of the gig economy – defined by flexible, short-term and unpredictable payments.
“Despite the rise of digitisation and the Internet of Things, some payment infrastructures date back to the 1960s,” he says.
“Society expects payments to be real-time and flexible. The back office is still a bit rusty when it comes to this, despite the front office being all shiny and modern. This disconnect of decades needs to be bridged.”
Adshead-Grant’s extra takeaway message to decision-makers looking to navigate through the changing payments landscape is: Don’t lose sight of security.
“Even though we are talking about redefining the back-end and ensuring it’s fit for purpose for a competitive, modern economy, security is so important,” he says.
“Whether you’re looking at Faster Payments or regulatory impact, you have to keep an eye on the security and the integrity of the payments as the world changes. All payment systems need to be trusted and secure, otherwise money and corporate reputation can be at risk.”