Beyond the catastrophic health and well-being costs of the coronavirus crisis — the business scramble to keep firms afloat, the fight to keep workers safe, and the imperative to keep the supply chain going for everyone’s benefit, business and consumer alike — are the wider implications on the global payments market. With at least six months of business and supply chain disruption behind us, many firms are wondering where they will be in the next six months. The answer to that question rests partly on the efficiency of our payments infrastructure.
To help business continuity, we must be able to trust our payment systems to remain robust and work efficiently in real time so that buying firms, their suppliers and their customers can continue to transfer funds in return for goods and services, regardless of economic tremors in the market. While supply chains will recover from the crisis at different times, depending on geography, our payments systems must be constant if they are to help business through a time of disruption. So businesses and the P2P solutions they rely on should consider putting the payments element at the core of their strategic agenda.
An integrated end-to-end payment solution will remove process friction
Spend Matters spoke with the Chief Product Officer at TransferMate Global Payments, Gary Conroy, whose career has been spent at the intersection between services and technology.
He and TransferMate are focused on re-imagining business payments, by integrating into procure-to-pay platforms to complete that last mile of B2B payments between buyers and suppliers. Before TransferMate Global Payments, his time was spent in investment banking with Goldman Sachs, in retail banking with Finastra, where he implemented systems across Africa, India and Colombia, and with Global Payments Inc., scaling an eCommerce Payment Gateway to a volume of over 50bn euros annually. Throughout these Financial Services technology companies ran a consistent theme: to build solutions that enhance the user experience through integrated payments.
To the payments solution provider, therefore, falls the task of integrating with relevant tech platforms, networks and ecosystems. This means removing the friction points not only in the front-end solutions, but also the back-end processes. With regard to international money movement, this means not relying on SWIFT and correspondent banking, but controlling and owning a global network of local payment accounts.
“When we talk about applying efficient technology to both the front and back end of the payments process, we mean that the user experience should be seamless, from how they interact with the technology interface right through to how the money moves through the system,” Gary said. “SWIFT involves sending messages from one bank to another — it’s a chain of messages that can incur time delays, and everyone in the critical path takes a fee. What TransferMate has done is re-imagine this process by creating a global network of local accounts, so we control the end-to-end money movement. This combination of user tech and back-end payments tech enables a smooth, uninterrupted last-mile process — so now P2P is literally from procurement right through to payment.”
What TransferMate has been focusing on is giving the digital experience that people are used to in consumer life, like taking a credit or debit card and just tapping it for a seamless experience, and bringing that to the procurement and AP professional. This is done by embedding a “payment-as-a-service” solution into the tech platform.
Now, why is that so important?
What does embedded Payments as a Service mean for me?
“Any procurement transformation process, to be worth doing, must transform the whole process, not just the sourcing part,” said Gary. “Having an end-to-end payment solution integrated with your P2P system means you have full visibility. Once upon a time your process took on a ‘from procure to ok-to-pay’ stance, which was then handed off to the ERP payment function or AP, where you then lost sight of it. But by embedding the payments process into the systems and processes you are using to create POs, capture and match invoices, and seek approvals, you can see how and when they are being paid, and whether the full balance of funds has been received. It means you can give your supplier the potential to apply for early discounting, for example.”
Through its technology, TransferMate acts rather like a network, bringing the visibility of the data, the simplicity of the experience, and the control into the buyer/supplier relationship.
“And procure-to-pay platforms are seeing the benefit of opening up their systems to embed payments and other functionality,” he said.
Digital means the full process, not a single task
While TransferMate’s success is bred from the rise of the “API economy,” Gary says ambition is required on digital transformation projects.
“We don’t like to think of it as just digitizing tasks,” he said, “it’s more about re-imagining the process. Continuing to use paper checks, for example, leads to silos, so do you just digitize the checks, or rethink the process? Simply digitizing any asset, by taking an image of it, means it might sit on a file server somewhere, it might not be secure, it might be editable. And digitally sending something can mean email. But the systems must be fit for purpose. Platforms are becoming tailored to the business process. When that happens, then as a general rule of thumb the business process is not only more efficient, but also more secure and you actually reduce the risk profile of the company by selecting the right technology.”
There’s no doubt the current COVID crisis has forced us to think about how we do things. The digital transformation that we should have been doing for the past decade is now a matter of necessity. The current situation has forced businesses to look at paperless processes, and a lot of companies have now ticked the box on operational and tactical digital projects.
“But,” Gary said, “the opportunity is now to move from tactical to strategic digital transformation. We are focusing on providing the opportunity to do this and to deliver business value by protecting the supply chain, the financial assets and making people’s jobs more value-add.”
Three things to look for in a solution
“To my mind, when a procurement professional goes looking for a new piece of technology, they will most often have an RFP or a list of about 50 items they want covered,” he said. “But many a time, lost in the mix is the implementation phase. This is important because you have to connect to your ERP and AP systems, and to any legacy procurement systems. You may also need to interface with treasury systems. And then, of course, there’s the banking systems. So you need to think about how easy it would be to implement the 50 things on your list. You should also ask the question — am I locked in?”
So there are three things he recommends considering to find the tech that is going to work for you:
- SaaS — “It has been said that tech is what is disrupting so many verticals. I believe that this is shifting, and that it is ‘services’ which are now the disrupter and easing the workload. This has happened with the move from on-premise to cloud. With no huge implementation costs, software that was the preserve of the large enterprises, is now available for all mid-market firms. So your question should be — is this technology available as a service?”
- API Economy — “We see many firms acquiring other firms to fill a gap in their capability, to make their solution rounded. In the payments world, APIs are allowing us to stitch together applications in real time. And real time is what is important. So the question to ask for payments tech is: How easy is it to integrate? And then: Is money movement batch-based? Does it do this overnight? Or is it real time? The API economy is driving real-time experiences, and that is what you need to be looking for.”
- Regulation — “It’s important to remember that regulation doesn’t just hold a supervisory role, it’s a driver of innovation. We can see this in the 410 million open banking calls in the UK every month, of which less than 1 million are now related to payment initiations. We are seeing more one-click solutions coming to market, and regulators are looking to open up competition and encourage an ecosystem of solutions. So your question is — Does this tech help me be compliant for the jurisdiction in which I’m doing business? Will it scale with my company and future-proof it as much as possible — because even if you are not doing business in a particular country now, you may well be in the future.”
‘As a Service’ opens up global capability
Where once a huge cash injection was needed to begin a business, with massive infrastructure costs at start-up, services means you can open a web services business account, and your infrastructure comes as a service.
So what does that mean for global payments? Do you need multi-currency accounts for all the countries you operate in? What if you could employ payments as a service, and instead of building the infrastructure, just consume it as a service? To facilitate a global business, you need global solutions, but with local relevance and local access so that your businesses can scale more quickly.
Digital Payments as a Service means suppliers experience real-time payments; the supply chain keeps liquidity going; buyers have visibility and control; the stress is removed from tactical operations; time is freed up for strategic tasks, and, importantly, fees are significantly reduced. It all adds up to an uninterrupted flow of payments that will future-proof the supply market as much as any technology can facilitate.