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SAME DAY REMITTANCE IS A WELCOME BOOST FOR SMALL MERCHANTS THIS BLACK FRIDAY

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UTP Merchant Services, Jaime Lowe, Sales Director

On November 26th, much of the globe will witness the start of the peak festive trading season – Black Friday. It is hoped that this year’s Black Friday will have a different complexion to the one of 2020, heavily impacted as it was by COVID-19 and lockdown.

Brits plan to spend an estimated £4.8 billion on Black Friday and Cyber Monday purchases this year and, while this doesn’t meet pre-COVID estimates, it will still mark the start of an important uptick in spending for many businesses.

When it comes to taking payments during these hectic but vital few days, smaller merchants will need to manage the spike in demand as deftly as their larger counterparts. Shoppers’ habits have changed to meet the new digitised normal, and merchants are expected to offer more payment options than ever before.

Innovation is widespread when it comes to speeding up merchant payment processing, however, once a purchase has been made, the money can still spend days in financial limbo before it is available again for merchants to use.

The typical three day timeframe for payments to be credited has been accepted in the payments industry for decades, but now the technology to shorten processing times to hours, even minutes, is available and can help maximise the opportunity for thousands of businesses in peak periods.

 

Payments challenges on Black Friday

Though the festive trading period comes as a welcome boost for merchants, its frenetic pace means that keeping tabs on business sales and spend takes on a renewed importance. With stock that needs more regular replenishment and extra seasonal staff requiring payment, waiting days at a time for transactions to settle at best adds a layer of stress. At worst, it prevents smaller merchants from capitalising on the surge in trade as fully as they could.

As such, cashflow is a major concern in any business. This is especially true of smaller businesses – while large chains will often have cash reserves that allow them to pay their employees and pay for any unexpected expenses, smaller businesses will tend to be operating with less banked. Most UK firms have only three months of cash reserves, and 18% have less than a month – that 18% is likely to be mostly small businesses.

For businesses of any size being able to see exactly what is happening in the company from a financial perspective is vital, especially during hectic times like Black Friday, and this is an area in which innovations like faster processing can help. On a basic level it simplifies the decision-making process: you will have a more accurate view of funds at any given moment and can make plans accordingly rather than allocating future profits.

It was the smaller merchants that suffered the heaviest blows during the months of enforced restrictions and it is these same merchants who will be most looking forward to a period of heightened consumer spending. Multiple factors will determine how many of these smaller merchants are able to maximise the potential of Black Friday, Cyber Monday, and any future periods of increased consumer activity, but armed with heightened processing solutions, their chances are greatly improved.

Faster processing is an innovation that has the potential to level the playing field between small businesses and larger merchants, giving companies that must deal with cashflow problems the ability to pay suppliers and plan for growth. For businesses of any size, it can mean having greater visibility over the money coming in during a busy period backed by sophisticated reporting systems.

With seemingly everything else in the modern retail world happening instantly the three-to-five-day timeframe stipulation in payment reconciliation seems like a relic that benefits everyone except the merchant. It has perhaps been the standard for long enough that organisations forget how customer-unfriendly it actually is, but the good news is that there are alternatives available that can ensure that merchants are being paid on time.

 

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Real-time payments are here to stay and with good reason 

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Real-time Payment (RtP) models are here to stay for the foreseeable future alongside traditional payment schemes. But as businesses increasingly recognize their potential, further cases for real-time payments are coming to the fore. That’s according to Buckzy Payments Inc., (https://buckzy.net/) the Toronto-based global fintech on a mission to make international payments quicker, more reliable, and more affordable.

Umesh Maini, Chief Product Officer at Buckzy, stated, “Customer-oriented businesses such as retailers and hospitality providers value the increased speed with which they receive funds through real-time payments. In addition, during the Covid-19 pandemic, cross-border online purchasing increased, which put more pressure on liquidity for merchants due to the settlement times involved. But with the pandemic far from over, businesses from a wide variety of industries are also now looking at RtP with increased interest as a remedy to this issue, since with RtP it is the payer that is responsible for and controls the flow of funds rather than the payee and their bank or payment provider.

“RtP not only speeds up client payments – it can also improve cash flows, budgeting, financial projections and cash management,” explained Maini. “And if that’s not enough to get every Chief Financial Officer sitting up and paying attention, RtP also offers an opportunity to support and accelerate other digital innovations and trends, such as expedited bill payments, faster payroll disbursements to workers, and the ability for current account holders to manage their cash better. In other words, it acts as a major catalyst for businesses to digitally transform their business models by being able to accept payments that are settled in real-time.”

“Across the world, tech-savvy consumers and companies alike now want their bill payments, online shopping and cross-border transactions completed instantly, cheaply and at scale. That’s the power of RtP,” added Maini.

Maini summarizes the main benefits for financial services providers to adopt and support real-time payments as follows:

  • RtP helps with customer acquisition a real-time payment provides an additional set of services that will help to attract new customers
  • RtP removes the need to use costly, outdated fund transfer methods like SWIFT
  • RtP provides extra clarity for users to manage cash through up-to-the minute transaction histories and real-time account balances
  • Increased revenue through improved economies of scale and customer retention
  • Manual processes can be reduced, which in turn saves costs
  • RtP enables better customer insights compared with cash, which can then be used by the payment provider to improve their other financial services
  • RtP data can also improve anti-money laundering (AML) and fraud monitoring

“As with any major shift in technology, payment providers will face both costs and benefits to upgrade their systems to a new faster payments infrastructure. Investment by providers and adoption by users will both depend on the specific benefits each gains from real-time payments. Consumers today expect to get what they want quickly and at any time, at the push of a button. This also goes for their payments and it’s why RtP will quickly become the new normal,” concluded Maini.

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Union Bank of India goes live with RuPay Credit Card on UPI with Kiya.ai as a technology partner

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Nitesh Ranjan, ED Union Bank of India with Rajesh Mirjankar, Managing Director & CEO, Kiya.ai at the launch

 

Kiya.ai, one of the most innovative digital solutions providers in India, announced that Union Bank of India was among the first banks to launch NPCI’s UPI linked to Rupay Credit Card and UPI Lite on the unified payments interface (UPI) platform with Kiya.ai as their technology partner in this achievement.

The announcement comes after the RBI Governor Shri Shaktikanta Das and National Payments Corporation of India (NPCI) launched RuPay credit card on UPI, UPI Lite and Cross Border payments for BBPS at Global Fintech Fest 2022.

Until now, UPI allowed the linking of bank accounts by mapping an account linked with a mobile number and an savings / current account. Earlier in June 2022, the RBI allowed the linking of credit cards with UPI, stating that RuPay credit cards would be initially linked with UPI “to provide additional convenience to users and enhance the scope of digital payments”.

Rajesh Mirjankar, Managing Director & CEO, Kiya.ai, “We are extremely delighted to partner with Union Bank of India in this pilot project of linking RuPay Credit card on UPI. Kiya.ai has partnered with Union Bank of India for various digital payment initiatives including UPI, UPI Lite, UPI linkage to credit card, and sandbox for API banking.  The linking of credit card to UPI will significantly enhance high-volume transactions while also increasing average amount per transaction given the ease of using credit facility on UPI. This is a game-changing initiative as it will ensure safe and contactless transactions, reducing the risk of credit card frauds too.”

Mr. Nitesh Ranjan, ED Union Bank of India said, “We are pleased to embrace the decision taken by the Reserve Bank of India and NPCI to enable Rupay credit cards through UPI. Union Bank of India is proud to be a part of this launch. This is a game changer as one would be able to use a credit card for doing payments using UPI. We are excited to partner with Kiya.ai on this journey, and together, we can provide a smooth user experience to customers and make India even more digitally advanced.”

As part of the pilot project, NPCI will integrate the UPI AutoPay feature with credit card transactions to reduce the risk of defaults on credit card payments.

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