There are many barriers to businesses’ adoption of new payment systems, according to a recent whitepaper by Volante Technologies.
The whitepaper, entitled ‘Effective Preprocessing: the path to faster payments modernisation’ and prepared by Aite Novarica, discusses the challenges of payment modernisation, how these can be mitigated and what financial institution professionals should do going forwards.
Currently, approximately 42 per cent of businesses wait for their primary relationship bank to offer new payment channels and capabilities — although many are enthusiastic about adopting new methods, the cost of doing so independently is a considerable barrier. If banks offer file format translation, and do not rely on file format requirements, this becomes far more accessible.
However, the replacement of payment engines can be expensive for the banks themselves, and can bring new risks into their operations. The impact on processes can be a disruption to clients, in spite of the overall goal of improving services.
Cloud-based payment systems can be an attractive alternative, able to be integrated into existing systems with minimal disruption and reduced implementation times. Modularised solutions should be prioritised, the report claims, avoiding the need for entire payment engine replacements.
A further way to reduce cost is through the adoption of payment channels through businesses’ existing accounting systems, which will allow for greater sales opportunities and streamline the onboarding process.
Banks also need to offer logic-based routing rather than only connecting businesses with new payment rails, the report claims. Without doing so, the management of payment and transaction fees remains overly complex.
Straight-through processing rates will be improved by preprocessing incoming payments, the report states, so as to emulate the complexities of a payment engine environment.
Effective preparations for ISO 20022 implementation is cited as an essential component of payment modernisation, allowing firms to maximise and future-proof their efforts while still providing customers with the support they require.
