Payments Priorities for Treasurers
Innovation in payments and technologies, the increasing success of e-commerce marketplaces and regulations are reshaping the digital payments landscape. Success will come from banks and corporate treasurers working together to ensure a seamless and secure payments experience for buyers and sellers.
Significant transformation of the digital payments landscape is being driven by innovation in e-commerce marketplaces and by regulation, says Lirka Bibezic, Global Head, Product Management, Receivables, BNP Paribas. “It is important to recognise the role that regulations are playing in this transformation – it is not only about innovation, although marketplaces such as Amazon, Alibaba and eBay have clearly revolutionised this space.”
The consolidation created by e-commerce marketplaces has transformed commerce not only for large and small sellers, but also for consumers. An uninterrupted shopping experience, across borders has helped to build greater trust in online transactions.
In addition, real-time payments and instant transactions are shaping the digital payments space. Regulation has played its part here, with laws such as the European Union’s (EU’s) Instant Payment Regulation (IPR) that is helping to drive adoption of real-time payments, she says. The IPR makes instant payments fully available in euros to consumers and businesses in the EU and in European Economic Area (EEA) countries.
Any conversation about digital payments and e-commerce cannot overlook the cross-border payments element of this new world of payments, says Bibezic. “People are no longer buying goods only within their own country, but can buy from anywhere. This means there is, of course a significant need for efficiency in cross-border payments because at present, such payments remain costly.”
The replication game
Bibezic believes the One-Leg Out (OLO) Instant Credit Transfer (OCT Inst) scheme will go a long way towards reducing costs and complexity in cross-border payments. The scheme is a set of rules, practices and standards created to achieve interoperability for the provision and operation of the euro leg of an international instant credit transfer agreed at inter-PSP level within SEPA.
“For the euro leg of an international instant credit transfer, this scheme is significant. In a way, we will eventually be able to carry out instant payments worldwide. We hope OCT Inst will be successful because it can then be replicated anywhere,” she says.
Cross-border payments are not new, acknowledges Bibezic, but what is new is the transparency and the confirmation of payment. “Imagine making instant payments between Europe and Asia, or Latin America, for example. A scheme such as OCT Inst will enable users to see funds fully credited to or debited from their accounts within a few minutes. That is so important for businesses.”
SCT Inst will be a “game-changer” for not only banks but also for their clients across Europe, predicts Amedeo Gallina, Global Offer Manager, International Payments, BNP Paribas. “We are just at the beginning of a huge change for treasurers,” he says. “SCT Inst will become the ‘new normal’ and by January 2025, all banks in the in the Eurozone will be obliged to be reachable on the incoming side of an instant payment. As of October 2025, all banks must match the services they offer for SCT Inst [SEPA Instant Credit Transfer] with SCT classic. Non-euro countries will be asked to do the same later in 2027.”
This has been enabled by a common legal background, which Gallina says should drive “ high adoption” of the scheme from its launch. Banks must be ready to enable their corporate customers to take advantage of SCT Inst, he notes. “Mid 2025 will be a good moment for corporates to start thinking about moving their payments flows from the classic SCT instrument to SCT Inst. It will become a race to instant payments and banks need to be ready to support their clients to compete.”
BNP Paribas is working to develop new added value solutions based on instant, cross-border frictionless payments, he adds. Benefits for treasurers are not only linked to payments but also to receivables, particularly as corporate treasurers will be able to view account statements in real time. “In a few years, I think we will start to see 24/7 treasury and new business models for our clients, such as instant reimbursement everywhere in Europe first, and then worldwide as a second step.”
A new wallet for a new era
Bibezic notes other trends shaping digital payments: the use of digital wallets and mobile devices, and ‘ethical payments’ – where consumers, businesses and corporations consider sustainability and ethical practices in their day-to-day payment activities. Another trend of note is BNPL, which is being driven by a “huge demand”, she says. “BNPL offers a very easy, flexible payment option particularly in a booming e-commerce market. Moreover, BNPL providers are creating alliances with retailers and technology advances are making BNPL much easier to operate.”
BNPL increases consumers’ purchasing power, but Bibezic warns that it also has the potential to increase debt. “This might have consequences for consumers’ credit ratings, so there is a need for regulators to step in and ensure consumers don’t accumulate large levels of debt,” she says.
European banks and PSPs are stepping up to support corporate treasurers in the ever-changing digital payments environment via wero, a payment solution previously named the European Payments Initiative. Wero is a digital wallet offering that streamlines payments across various bank accounts, offering transparency and control.
“Wero is designed to deliver improved cash flow management, cost efficiency, better financial planning and forecasting, and improved security and compliance for corporate treasurers,” explains Bibezic. “It will promote common standards and protocols to ensure interoperability among different national payment systems within the EU .”
Improved security is an important goal in digital payments and there is often a trade-off between additional security and the friction it can introduce to payments. Bibezic believes AI will be another ‘game-changer’ and will enable fraud to be detected in real-time, which is a requirement for e-commerce marketplaces and for the overall security of online transactions.
“Security can also be enhanced by the use of biometrics, geolocation, and device fingerprint scanning for payment authorisation,” she says.
Gallina says banks such as BNP Paribas make large investments in fraud prevention “with good results”. The challenge now, he adds, is to invest in fraud prevention measures for the instant payments environment. “Technology such as machine learning and biometrics will help here, but it is also important to highlight that our clients must work on fraud prevention on their side, too.”
Ready and waiting
Standard bank messaging will also play a part, he adds. “The adoption of the same standard throughout the world for bank messaging – ISO 20022 XML – will give treasurers and banks richer, more precise data with which to fight payments fraud. The standard enables us to speak the same language worldwide, but we need it to be adopted not only by banks but also by our corporate clients.”
The full adoption of ISO 20022 by corporate treasurers for initiation and reporting remains a challenge, says Gallina. “It will be key if corporates can move to ISO 20022 end to end from initiation through to reporting,” he says. “This, of course, requires work with banking partners and ERP platforms but the solution is there, ready and waiting. Corporates also should review their internal processes for fraud prevention to ensure they are robust and suitable for the digital payments world.”
Looking even further ahead, Gallina sees a world in which AI will move treasury to 24/7 operations, removing the need for daily forecasting. It may be early days for this, but he notes that it is, nevertheless, a goal.
User experience matters
Amid the interest in new technologies and regulations, an element that can sometimes be overlooked is the UX. Bibezic says UX is crucial not only in the business to consumer world but also in the B2B world.
“There is a clear competitive advantage emerging in providing streamlined checkout experiences for users of e-commerce platforms,” she points out . “The customer journey has to be rapid and frictionless – and the payment solution must be embedded. It shouldn’t feel as if there are silos anywhere.”
Personalisation is also a key factor in UX, she notes. However, in personalising a payments experience, banks have to be careful that they do not intrude on the client. “We have to ensure that we have the client’s consent in relation to everything we do. Clients need to know who is using their data and how the data is used. It is extremely important to bear that in mind.”
In developing digital payments solutions, corporate clients shouldn’t be shy about raising questions and challenging their banks to offer more targeted solutions, suggests Gallina.
“We are all about co-creation of solutions – we work with them and they need to collaborate with us. Since the future of payments is looking complex, corporate treasurers should talk to their banks about what payments will look like going forward and how they can take advantage of strategic shifts. These must be honest conversations, conducted on a regular basis. While we have standards to help uniform communication, we also realise that each client is unique and any solution will therefore also be unique. That is what makes the payments space so exciting!”
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