THE FUTURE OF PAYMENTS A Corporate Perspective


The payments industry has transformed—in the space of several years—from one of stagnancy to one of radical, sweeping change. New technologies, and innovative solutions spawned from these new capabilities, have surfaced in a space that hasn't progressed in nearly 80 years, particularly in the U.S. The result of these changes has been one of upheaval for all parties involved—and primarily for the corporate space. With payments systems facing a variety of challenges, businesses are confronting a new set of options and capabilities that are compelling them to adjust and move with the changes if they are to grow and continue to succeed.

But such change comes at a price. At this juncture in time, entire corporate industry segments realize that now— as these new offerings are coming to the forefront—is the time to address the many pain points rife in payments operations that their industries have been encountering for decades. This paper was prepared to help you learn how businesses are experiencing the state of corporate payments today, the challenges they are facing as they seek to enter this burgeoning space going forward, and consequences for their industries and the payments industry as a whole. To derive an accurate view of the state of corporate payments today, we have combined the results of a BNY Mellon in-depth industry survey on the subject with payment-industry insights gleaned from more than a dozen comprehensive interviews of industry leaders—chosen among a select group of large U.S. domestic and multinational companies—who possess in-depth knowledge of and opinions about the evolving payments space. These insights, along with those derived from our experience in the payments market, combine in this paper to represent a referendum on the current effects of the radical changes that have been sweeping the payments industry on corporations today, and their vision for a dynamic and exciting payments future.

Forces Behind The Changes

The swiftly-transforming payments space has been largely heralded by a potent mix of market and cultural factors, including:

• Existing Payment Rail Limitations. Prior to the last few years, payment infrastructure across the globe was generally decades old, despite acceleration in technology developments. In response, a number of countries embarked upon initiatives to upgrade or invent new payments platforms, with the current real-time payments platform in the U.S. arising as the first in the U.S. market since the development of domestic ACH payments in the 1 970s. Cross-border payments, however, are still tied to legacy infrastructure. Traditional cross-border payments, sent within the correspondent banking system, can take up to four days to settle and are expensive, unpredictable and provide little transparency.

• Rise of Industry Competition in the Payment Space. With fallout from the 2008 financial crisis resulting in increased regulatory demands, and banks prioritizing accommodations to these requirements, opportunities arose for non-bank providers, such as fintechs, to fill the gap for an improvement in the payment experience. A combination of an increase in demand for mobile, person-to-person (typically small) payments, and customer attraction to the improved client experience, provided inroads for these new offerings. For corporate and other institutional clients, these improvements being provided directly to consumers did not go unnoticed, recognizing that service levels that providers offered to them seemed stuck in the past.

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