Reframing Real-Time Payments For The Corporate End User

Real-time payments continue to face an uncertain future in corporate and small business payments. Emerging real-time rails, as well as upgrades to current infrastructure targeting faster movement of funds, are efforts that today are viewed as essential to keeping pace with a rapidly evolving and digitizing economy. They’re also key to propelling that evolution even further.

Yet for businesses, making payments in real time is not necessarily at the top of their priority lists. Increasingly, the discussion around real-time payment methods has instead turned to the value these networks and technologies can provide to the enterprise in other ways — namely, by providing predictability, transparency and enriched transaction data.

Jeremy Tan, CEO of Singapore-based Liquid Group, told PYMNTS that there are indeed valuable use cases of real-time payments for B2B transactions in which speed is the valuable factor for an organization. As the payments ecosystem evolves, there will be a new opportunity for organizations to reframe their payments strategies and benefit from enhanced infrastructure.

Real-Time Payments Use Cases

As organizations explore potential use cases for faster and real-time payments, service providers have begun touting the benefit of transparency and access to data as important components of real time’s value proposition. Speed, meanwhile, continues to be dismissed as a less critical component.

But Tan noted that there are indeed important applications for real-time transactions for businesses.

“The advantage is when real-time payments are applied in logistics and trade flows, where payment matches the actual movement of goods and services,” he said, adding that there are “knock-on” impacts on credit lines, cash-in-transit and prepayment workflows.

These scenarios have also been raised as potential points of opportunity for new infrastructure like blockchain and smart contract technology, with some innovators looking to deploy solutions that can, for example, automatically release funds upon completion of an event, like the arrival of cargo at a port.

Tan also identified cross-border transactions and global trade as other key areas in which speed can be a highly valuable tool for businesses.

“Specific to cross-border trade, we see interest in leveraging real-time payments to achieve locking in of real-time [foreign exchange (FX)] rates for tighter spreads,” he said.

For Liquid Group and its new real-time payment solutions for both businesses and consumers, direct integration into existing payment rails was the strategy for introducing speed. Looping into Singapore’s FAST and PayNow real-time services allowed for accelerated product development and transparent pricing, Tan noted.

Reframing Payments

As the payments ecosystem evolves with a focus on real-time transacting and settlement, Tan said there is an opportunity for corporates to revamp their payment strategies. Some may find it beneficial to rethink the concept of payments altogether.

“We like to frame payments as ‘revenue collection,’” he said. “As businesses adopt new channels to sell, market and deliver their products and services, there is a need to access digital payments.”

He pointed to the businesses across the globe that pivoted their business models, either by necessity or in an effort to maximize revenue amid quickly changing market patterns. As digital transformation accelerates, the need to embrace electronic payment technologies in order to collect and optimize revenue grows.

For the businesses themselves, it will be up to them to prepare for this transformation. Not only obtaining the platforms and tools they need to gain access to real-time payment rails and services, but investing in other tools — like application programming interfaces (APIs) that can facilitate integration of those solutions in their back offices — will have a great impact on their revenue and growth strategies.

But, noted Tan, “It takes two hands to clap.”

In other words, payment service providers and other key players in the payments ecosystem must do their part to prepare businesses to embrace the value of real-time payments.

Industry firms should similarly invest in API frameworks, he said. And whether innovators decide to enhance existing payment infrastructure to accelerate transaction speeds, drive transparency and deliver richer data to corporate end users — or build entirely new rails from the ground up to provide such benefits — payments innovators must act quickly to help corporates gain the most from these initiatives.

“We get the sense that we will evolve into a world of multiple, overlapping, global cross-border payment infrastructures before consolidating again [in the] next decade,” said Tan. “This is healthy.”