Opportunities to Improve Corporate Payments
A Federal Reserve Bank of New York survey of corporate treasurers and cash managers identified key areas
of opportunity in the payment industry. Financial institutions and payment service providers that
successfully address these concerns will gain the market share in the coming years.
The survey results highlight five key areas for improvement.
Debit transactions carry risks and costs that corporations want reduced. Payment experts
at firms that make payments using ACH debits, credit cards, or debit cards believe too many
unauthorized debits occur and say these transactions take too long to correct. Nearly 30% of
this sample of very large businesses do not use debit transactions for these reasons. Payment experts at firms using ACH debits, credit cards, or debit cards are exposed to
the risk that their customers' accounts will have insufficient funds and are burdened by the
expense of collecting on payments returned for insufficient funds. Large companies need greater certainty and quicker posting of payments received from
outside the United States. Businesses are frustrated when incoming payments are accompanied by missing or incomplete
remittance data. Thus a large number of incoming credit payments can not be reconciled with a
specific transaction or customer. Businesses seek to reduce the costs of matching and appropriately
posting incoming payments. Businesses are concerned by the level of bank fees and the difficulty of matching them to
actual services used. Large businesses seem to experience difficulty matching their use of
payment services with reports received from their banks.
These areas are opportunities for identifying improvements to payments services. Discussion between
corporations, their banks, and payments service providers should focus on potential solutions and
the related costs and benefits.
Sources:
"Opportunities To Improve Payment Services" AFP Exchange
February 28, 2005, by Sandy Krieger and Michele Braun, Federal Reserve Bank of New York.
Opportunities to Improve Payments Services: Results from a Survey of
Large Corporations by Sandy Krieger and Michele Braun, Federal Reserve Bank of New York, July, 2004.
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