Citi Perspectives Fall 2023: Transforming Treasury

Manash Dasgupta NAMHead, Industrial Solution Sales, Citi Treasury and Trade Solution A final consideration for treasury is settlement timing. Businesses will need to understand settlement timing and process in each market, as it can range from two to 30 business days, which will impact the company’s cash position. So, for instance, wallets and cards might settle in two days, but “buy now pay later” and other local payment methods can take up to 30 days to settle. For this reason, it is important for the different business teams to fully understand the potential impacts on cash position, working capital, reconciliation and reporting. Improving the customer experience through ease of payments As previously mentioned, there are numerous payment methods that play a role in digital commerce today. The top methods continue to be credit and debit cards, but other payment types are growing in popularity every day. Currently, there is rapid growth in digital and mobile wallets along with growing adoption of bank transfers that take advantage of a compelling QR codes experience and instant payment rails. Direct debit transactions, such as ACH which has become more efficient, cheaper and more reliable, are also on the rise. Local payment methods are growing in popularity, as well. At the same time, governments are playing a role through their support of open banking and the rise of nationalized payment schemes. This has brought about the pay-by- bank experience, which has proved particularly compelling for improving the customer experience. The pros and cons of payments service providers While payment service providers (PSPs) can quickly enable payments to support an e-commerce business, their value can be quickly offset by higher costs and service limitations. Popular PSPs are often fintech driven but rely on banks to provide money movement and payment handling capabilities. Merchants are attracted to the ease of set up and having a single contract for multiple markets. PSPs reduce the complexity of digital payments, but they do come with trade-offs. Treasury oftentimes loses a degree of control, visibility, and access to the underlying bank partners. Again, if the backend payment infrastructure fails, there is little recourse to remedy the situation. Because the business is unable to speak directly to the acquirer, who is underlying their service, it becomes more difficult to leverage the strength of the relationship to improve funds availability timeframes. Of course, there are bank solutions that perform a similar function to PSPs, while still meeting the need for control and transparency. Such solutions support a comprehensive set of payment methods in markets around the world but do so in ways that connect seamlessly to the treasury and cash management processes already in place. This approach is geared to delivering a consistent experience around the world by simplifying the complexity of digital payment acceptance for merchants. By facilitating new direct-to- consumer experiences, these solutions can help marketplace businesses expand across multiple markets. As stated earlier, treasury has a key role to play in helping the business to chart the best course of action in adopting digital payments to meet the demands of customers and global growth objectives. In the final analysis, delivering a greatly improved customer experience can come from the modernization of payment acceptance processes. | 43 Driving transformation: Enhancing the customer experience through the digitalization of payments