The Future of Payments

45 BANKING PERSPECTIVES QUARTER 4 2018 Providing funds to employees and their families in an emergency can be tricky. Even companies that think ahead and have cash on hand to distribute may not be successful if roads are impassible. terminations. Unexpected circumstances resulting in the need to terminate an employee immediately, however, may result in noncompliance with the law. Locations without the means to cut a check or withdraw cash to handle these situations are especially at risk of violations. ACCOUNTS PAYABLE EXCEPTION ITEMS As businesses centralize more payment activities in shared service centers, operating centers often lose their ability to initiate payments. Shared service centers are capable of handling most accounts payable scenarios. However, a certain portion of vendor payments will always need to be made on the spot. From buying fresh fish on docks to paying for repairs, companies may need to complete transactions before taking possession of perishable goods or for the performance of time-critical services. These types of accounts payable exception items traditionally have been initiated locally using petty cash or checks outside the shared services process. Real-time payments provide an alternative that would allow shared services to continue to manage the payments needed locally in a centralized location. This payment method removes the need for the operating center to handle physical cash or checks. Long-term, this method tightens controls while meeting business needs. BUSINESS TRAVEL Employees at all levels may travel on company business to various parts of the world. Frequent businesses travelers often have company issued travel and entertainment (T&E) cards at their disposal to make business-related travel purchases. These cards allow the company to capture rebates and extend payables. Employees benefit by freeing up their personal line of credit. T&E cards also provide control mechanisms that prevent workers frommaking purchases outside the company’s travel policy. Usually, T&E cards function well and meet the needs of the traveler and the company. However, an employee sometimes encounters situations in which the T&E card is inadequate for any number of reasons. The card type may not be widely accepted at the destination. The traveler may need to make a necessary purchase in an area where only cash is an option. If the company knows of potential problems in advance, it can plan for these issues and provide the traveler with alternative means of making payment. When unexpected difficulties occur, the best option may be to send funds electronically to the traveler’s bank account. In these situations, standard ACH and wire transfers may be inadequate, especially if the issue takes place after cutoff times, on weekends, or during bank holidays. A real-time payment would be optimal under these circumstances. DISASTER RELIEF Over the last year, the U.S. endured hurricanes, flooding, fires, and volcanic eruptions. Companies have seen their workers affected by these events and wanted to assist where possible for the displaced and grieving. However, providing funds to employees and their families when in an emergency can be tricky. Even companies that think ahead and have cash on hand to distribute may not be successful if roads are impassible or the location is in a mandatory evacuation zone. Banks within walking distance of stranded workers are not always operational. Sometimes the safest course of action is for employees to stay where they are and pay for emergency supplies using debit cards tied to their bank accounts. In these cases, companies need a real-time solution that allows for funds to be deposited directly into workers’ bank accounts. Story continues on the bottom of p. 110 Those institutions with real-time payment capabilities will be in higher demand as the public learns more about this option.