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What are the key considerations for adopting Request to Pay technology?

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When it comes to new ways to pay, consumers are making their preferences known. Overwhelmingly, today’s customers want fast, easy, and secure transactions and are increasingly willing to try new and emerging payments forms.

When you think about emerging payment forms such as Request to Pay, and the impact they might have on your organisation, what comes to mind? A complex, costly, and time-consuming undertaking?

It doesn’t have to be that way. Simply put, Request to Pay is a new, more flexible way for payments to be made between people, organisations, and businesses. It allows payments to be initiated, approved, monitored, and actioned via a secure messaging system. And it has the ability to influence both your technology strategy and roadmap.

Let’s take a look at some of the important considerations to keep in mind when evaluating Request to Pay technologies.

Request to Pay-type proposals

In the past few years, both Fintechs and Neobanks have introduced new Request to Pay-type propositions to the market. These propositions, though commercially different, do share similarities with Request to Pay, such as the ability to create a payment link which must then be sent from the payee to the payer. Some of the propositions also allow the payment reference and/or amount of the request to be changed and some even support multi-currency.

Although these solutions do share some similar functionality with Request to Pay, they differ in that they can be deemed potentially less secure since the payment request itself isn’t necessarily delivered over a secure channel. Furthermore, when the request is paid, users also need to make sure that the reference and amount haven’t been modified. This can mean additional work for payment reconciliation teams.

Adherence to different standards

Beyond security, Request to Pay propositions also face challenges when it comes to issues surrounding availability, interoperability, on/off boarding processes, performance, reachability, security, and standardisation.

For example, within the European Economic Area, two sets of standards exist, with Pay.UK governing the UK market and European Payments Council publishing standards for the rest of Europe. These standards differ dramatically with regards to API standards, message flows, and the types of payments supported. This makes it extremely difficult for banks to support both.

Pay.UK

Pay.UK is the UK payments governing body that is responsible for setting out the direction of all payments and payments overlay services frameworks, that anyone who wishes to operate in that space must comply with.

The Pay.UK Request to Pay framework is made up of three layers, representing the front end, the back end, and the guidelines within which the Request to Pay proposition must operate:

  • Applications
  • Repositories
  • Framework

The framework has been created as a proprietary API overlay service to the UK’s existing payments infrastructure. This enforces complete separation of the secure Request to Pay payment request messages with the payment itself, enabling you to continue to use your existing payment rails to facilitate Request to Pay payments.

SEPA RTP (SRTP)

European Payments Council noted the requirement for a Request to Pay proposition within Europe and have created a scheme to meet demand. SEPA Request to Pay uses the Request for Payment (pain.013) and Response to Request for Payment (pain.014) ISO 20022 messages to facilitate Request to Pay. The rulebook suggests a generic four-corner model (one payee, one payer and two service providers), though they do note that three-corner models and payee or payer direct models are viable alternatives.

There isn’t a standardised Payer Identifier for the requests which leaves room for divergence and all payments made via SRTP must be made in Euros using SEPA Credit Transfer or SEPA Instant.

General principles

Message and payment security within any Request to Pay model are critical for success. Customers will be more confident when accepting or initiating a payment request if they feel like they are doing so in a secure manner, or if they can log in to an existing mobile application or website with multi-factor authentication and see a record of outstanding requests and payments already made.

To promote confidence in the security of a Request to Pay solution, organisations should have solid underlying data definitions and data structures (ideally in ISO 20022 format) to provide reconciliation, data analytics and management information for all relevant stakeholders.

The value of an open-source modular platform for Request to Pay

To accelerate adoption and drive value, organisations should consider deploying an open-source technology platform to enable a Request to Pay solution. This makes the transition to Request to Pay both cost-effective and straightforward.

The right modular payments platform, for example, relies on open-source technology to provide orchestration support for Request to Pay out of the box. It allows for quick integration with existing payment rails by generating Faster Payment (ISO 8583) or similar messages for existing payment engines or provide a low-cost per payment solution for Euro SEPA Credit Transfer / SEPA Instant payments. A low-code, cloud-native, open-source technology platform can help organisations accelerate payments transformation, address both critical non-functional and functional requirements, and deliver more value and unlock new revenues – all while lowering costs and risk.

Icon recently conducted a survey of global retail and corporate banks, which revealed that standardising message content and exchange are seen as key challenges limiting adoption of Request to Pay, alongside bank readiness which was overwhelmingly viewed as the main barrier to adoption. With banks already at the limits of their technological and strategic capacity, trusted third parties promise to play an important role in helping banks to adopt Request to Pay while embracing regulatory changes, enabling innovation, and driving new revenues.

 

Finance

Is your business ready for finance automation?

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Mari-Frances Bentvelzen, Business Head and General Manager of Global SMB at SAP Concur

 

As managers continue to drive their businesses through these uncertain economic times, it is important for them to properly equip and guide their organisations. Small to medium-sized businesses (SMBs) are looking to save money during this inflation crisis. By looking carefully into different areas, there are many hidden costs that can be found to combat rising expenses and interest rates.

With 2023 approaching, it’s time for businesses to be more proactive towards improving their processes. Automating administratively heavy tasks can be hugely beneficial in saving time and resources, both of which can have a big impact on the bottom line.

Although travel logistics, expense tracking and invoice processing can sound like a lot of background noise, these processes can all be optimised through automation. This offers more visibility for finance leaders and helps free up valuable time and resources for employees within the organisation.

Identify which key areas need automation

The first step to adopting automation is highlighting which areas can be improved with specific technology. This includes auditing the business and identifying which areas are outdated. From this point, businesses need to determine which processes and procedures may benefit from digital transformation. High on the list are manual processes and data input — two areas that often are riddled with mistakes and delays. Automating these areas proves to be useful for both the organisation and its employees.

Another common issue that finance leaders face is lack of access into full spend visibility. To improve decision making, managers must be confident about the trusted insights, transparency and perspectives in their business. Reporting tools and automated processes can help verify expenses through integration with other vendors and systems.

Without automation, it is difficult for finance departments to ensure all data has been inputted and centralised. This can make it difficult to determine the most appropriate and potentially effective areas to target cost-saving measures. Spend management solutions can, however, provide finance leaders with full visibility into where their money is being spend, enabling any spend that does not correlate with policy to be flagged. This can help businesses to reduce non-compliant spend and increase policy and regulatory compliance.

Find the best solution for both business and employees

Once these areas are identified, the business must adjust for compliance requirements, infrastructure changes and spend changes. Finance leaders should select the best solution to streamline current processes, whilst also improving budgetary controls and employee safety and satisfaction.

It is important for companies to place employee experience and innovation at the forefront of decision making, with training and ongoing employee support. Expenses — the reimbursement process, specifically — often have an under-appreciated role in employee engagement.

In fact, the new SAP Concur Employee Experience study reveals that 70% of employees in the UK are concerned about the impact of cost-of-living increases on their personal finances. And it’s late reimbursements for expenses that are causing employees to worry, with 56% worried about delayed reimbursements impacting their personal finances. This is why it is crucial for organisations to adopt automation to help accelerate processes and relieve reimbursement worry.

We worked with Brother UK (Printing and technology solutions) to automate their processes within their internal finance department. Brother has many employees who have worked for the company for more than two decades, with many processes identical to the day they started. Unsurprisingly, these employees were reluctant to making big changes, as they were used to carrying out their work in very specific ways. And with the obvious talent crisis, Brother realised that it was more important than ever to focus on the employee experience.

Brother put their employees first, ensuring communication remained transparent during the entire project. The company also brought staff directly into the decision-making process, elevating buy-in and a sense of ownership over forthcoming changes.

Now that Bother has automated many financial tasks, employees within the finance department are able to spend more time on strategic and rewarding work, rather than menial and time-consuming tasks. This improvement has been a positive experience for all. It has also helped employees to progress further in their careers.

Plan for the unpredictable future

Do you work for an SMB considering such changes? Don’t hesitate — now is the time to take the proactive step to streamline and grow your business. Overall, SMBs are being faced with the unknown and are being forced to adapt or pivot their business models. Finance automation will help futureproof your business during these uncertain times, bringing a level of stability to your organisation. This will allow employees to focus on future growth ambitions and make more informed decisions without having to worry about laborious tasks.

It’s important to remember a key part of running any business is relationship management — both with customers and employees. It’s important to choose solutions that will help drive profit margins whilst also acknowledging employee needs. For small businesses, maintaining clear communication with employees will not only help to ensure solution implementation is successful, but will also help to soften any resistance to automation.

And there’s so much more beyond basic finance automation. By taking an even deeper dive into invoices and expenses, businesses can find key data to help underpin certain goals such as reducing carbon emissions for business travel or enabling employees to submit expenses from anywhere at any time.

In the long run, digitising tired manual processes makes it more affordable for all businesses, no matter the size, to offer a competitive advantage during this era of change.

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Finance

Cost of living: How to identify vulnerable customers

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Ellie Engley is account director at REaD Group

 

In the current climate, the cost of living crisis is a real challenge for financial services companies who need to be able to support their vulnerable customers. One in six (17%) of UK households (4.4 million) are now in ‘serious financial difficulties’, compared to one in ten (2.8 million) in October 2021 – an additional 1.6 million households – according to research from Bristol University, while it was recently reported that one in five adults across the UK – nearly 11 million people – have fallen behind with at least one household bill payment.

As a financial services provider, it has never been more important to be able to identify and communicate appropriately with vulnerable customers; those who, due to their personal circumstances, are especially susceptible to detriment. Not only that, but there are three different levels of poverty to be aware of: ranging from income below minimum income standard, not enough income and destitution.

As a financial service provider, then, it has never been more important to communicate sensitively to customers, price products appropriately and protect customers from fraud.

Identifying vulnerable customers

As a responsible brand, the first step is to proactively identify vulnerable customers to exclude from particular direct marketing campaigns, where additional credit or non-essential purchases could increase the pressure on their personal circumstances. This is an ethical approach to direct marketing which also sees companies increase ROI and improve campaign success.

Using both internal first party and third party data, it is possible to build up a detailed picture of customers in order to identify the existing vulnerable groups, as well as the emerging vulnerable groups within your customer base.

This data can identify vulnerable and potentially vulnerable segments of consumers, including self-declared vulnerability or that shared by a first party, such as a bank, on behalf of the consumer, along with high-cost short term credit applications; houses of multiple occupation (HMO data); and consumer vulnerability metrics. This latter employs a segmentation model which takes into account census data to provide information on demographics, such as age, income, housing, education, financial products, affluence measures; transient states such as health; market forces acting on the consumer and their susceptibility to those forces; and the individual’s market preferences.

Taken together this data will provide a rich and detailed understanding or levels and types of vulnerability so brands are able to work with their customers responsibly. Gaining a better understanding of differing vulnerable segments in a customer base helps drive effective communication strategies, while simultaneously ensuring fair treatment.

Other warning signs

Changes in transactions and behaviour are another way to identify vulnerability in customers. It may be necessary to identify different segments or groups of customers who are classed as vulnerable for different reasons. Those consumers who were once deemed ‘financially stable’ now feel financially stretched and are at greater risk of financial vulnerability through increased cost of living and rise in inflation.

The use of third party datasets can also support the identification of these groups which provide information on changes in personal circumstances, short-term finance requirements, loss of income or employment and changes to relationship or residential status.

Using external data variables helps companies make data-driven decisions on how to price products, reduce fraud, identify vulnerable customers and ultimately make more personalised decisions using data. Data can be used across different teams, including marketing, fraud and pricing, for multiple purposes and projects.

Being able to supplement the data they hold on a customer can help marketing teams to not only help identify risk but help define what their need state actually is, whether that’s saving, moving house or having children. Enhancing customer data helps companies make better informed decisions.

Keep it clean

On top of this, every financial services provider should be keeping their consumer data clean and accurate. Data that is up to date will help businesses make more informed and responsible decisions about how they communicate with customers and prospects.

Above all, financial service providers should be mindful of the many more people who are now vulnerable, and communicating with care should be a brand’s mantra for the foreseeable future.

 

Ellie Engley is account director at REaD Group, a Sagacity company, which uses its data products, insight and expertise to help its clients get closer to their customers.

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