Vive la Révolution: Shaking Up Payments and Cash Management
By Eleanor Hill, Editor
Driven by technological and regulatory change, the payments landscape is currently a hotbed of innovation. Deborah Mur, Head of Global Liquidity and Cash Management, HSBC France, highlights some of the latest developments – including a recent collaboration between HSBC and PayPal – and explains how corporate treasurers stand to benefit. She also outlines French corporates’ current priorities and highlights how HSBC France can support European organisations in a post-Brexit world.
Eleanor Hill, TMI (EH): There is a great deal of innovation happening in the payments landscape right now. But are there also ‘under the radar’ developments that treasurers might benefit from?
Deborah Mur, HSBC France (DM): This is an extremely exciting time for the payments industry. Developments such as real-time payments and SWIFT’s global payments innovation (gpi) initiative are rightly receiving a lot of attention. The move away from physical cash and cheques towards digital payment methods is also a significant focus, together with the new collaborative ecosystem being created between banks and fintechs.
What lies underneath all of these trends, however, is the drive by banks, market infrastructures, and new entrants, to improve the payments experience – for the payer and the payee. Since the aim is to make the end-to-end payments process as frictionless as possible, this is certainly a trend that treasurers will benefit from going forward.
EH: Could you give an example of how an improved payments experience might be delivered to treasurers? What is HSBC doing in this space, for instance?
DM: Well, HSBC recently launched a service called Global Disbursements, which went live in June. The solution combines our FX and payments services into one process for cross-border, low-value, mass payments. Historically, these types of payments have involved complex, manual or costly processes – with many companies converting their FX separately. Through Global Disbursements, however, treasurers can make cross-border payments in 130+ currencies from a single operating account with one seamless process.
This means that treasurers can send payments quickly and easily to vendors, clients, expatriates and retirees living abroad or any beneficiary globally. They can also consolidate cross-border payments to effectively reduce the number of foreign currency accounts their organisation needs to hold – saving money, streamlining reconciliation and gaining more control over cash flows. In addition, there are cybersecurity and fraud benefits to rationalising bank accounts.
Alongside international wire payments, the solution also provides direct access to the domestic clearing systems in 68 countries – and corporates only need to supply one payment file to the bank. As well as offering an alternative to cash and cheques, one of the benefits of making payments through local ACHs is that the lifting fees can be reduced. This means that the beneficiary ultimately ends up with more funds, which can only be a positive outcome. In short, Global Disbursements takes friction out of the payments process, making things simpler, smoother, and cheaper.
EH: Which types of company might benefit from using Global Disbursements?
DM: The service has a number of different use cases and should be of interest to any organisation with low-value supplier payments in foreign currency, or small expense payments. Public sector pension funds who have beneficiaries abroad, as well as insurance companies who have cross-border claims, could also stand to benefit.
As the gig economy grows, we are also seeing interest in this solution from marketplaces, such as those where freelancers advertise their services. Companies who buy services on those marketplaces often have to make semi-regular payments to contractors, but these may well be low-value, cross-currency transactions – which is precisely where Global Disbursements comes in.
EH: HSBC recently added PayPal as a payment option for corporate clients using the Global Disbursements service. What were the drivers behind this move?
DM: Although we already have significant geographical coverage through the Global Disbursements service, we wanted to increase the number of beneficiaries that we could reach. That’s how this exciting PayPal collaboration came about – PayPal has over 237 million accounts worldwide and PayPal payment volumes have grown by around 20% yearly, accounting for 7.6 billion payments. And through Global Disbursements, we can now deliver PayPal instructions to 120 countries in 21 currencies.
We were also keen to improve the customer experience, and it’s very easy to use. Via an Application Programming Interface (API), we can check upfront on whether a particular beneficiary has a PayPal account. Treasurers can therefore pay beneficiaries without knowing their bank account or address details, which can in turn lead to an improved customer experience.
Think about a consumer goods company who wants to provide refunds on or compensation to buyers of their products, for example. In the past, the company would have had to email the customer, or asked them to fill in a form with their bank details on, which would then have taken time to process. With the PayPal solution, the company can pay out the rebate more or less instantly, which improves the customer experience and could improve customer loyalty too.
As such, we see this as an extremely exciting but also important innovation for treasurers, since it solves a number of the challenges often associated with low-value international payments.