Citi Perspectives Fall 2023: Transforming Treasury

The landscape has historically been very paper-driven, but is rapidly moving toward more electronic payment methods, driven by initiatives like real-time payments. 20 | Treasury and Trade Solutions Citi Perspectives Q. Howwould you describe the payments landscape inNorth America? A. The landscape has historically been very paper- driven, but is rapidly moving toward more electronic payment methods, driven by initiatives like real-time payments. While North America has long relied on checks, we are now seeing a significant change, with a year-over-year decline in the market. Cards, likewise, continue to be a predominant payment type here, but a rapid change is happening with things like real-time payments coming in, and the other peer- to-peer payment services. A lot of private sector initiatives are driving consumer flows and commerce. From an ACH perspective, payment volumes continue to grow— but they are now growing at a slower pace than in the past. Some of that is driven by payroll flows moving away from ACH and going into real-time payments. Q. What do you see as themost significant developments and initiatives? A. One of the most significant developments has been the launch and adoption of instant payments. But whereas many markets have mandated the adoption of instant payments, that kind of regulatory mandate does not exist in the U.S. —which means not all banks are reachable. This has somewhat slowed down the adoption of instant payments, but we are seeing good progress. Q. What sort of developments do you expect to see in the coming year? A. As our clients’ business models evolve, I think we will see a significant shift of flows from the traditional B2B to B2C/C2B, which will drive flows toward real-time payment schemes. Another big change is that along with the existing TCH Real Time Payments scheme, the FedNow scheme is due to be launched later in the year, which will drive adoption and increase reachability. In Canada, meanwhile, the existing infrastructure is being replaced by real-time rails (RTR). Payments in North America Anupam Sinha NAMHead, Payments and Receivables, Citi Treasury and Trade Solutions