Major global firms embrace real-time payments amid rising trends, survey shows

By Puja Sharma

Almost two-thirds of payments firms agree that over the next two years, there will be an increase in regulation, specifically around customer protection, data protection, and cryptocurrency. The future of payments is coming, with 85% of global firms ready for real-time payments within the next year. Most (65%) firms report still using outdated processes, such as manual spreadsheets, for crucial financial processes such as reconciliations

AutoRek, a reconciliation, and finance automation FinTech, released the findings of its global payments survey. The survey looked to understand the current issues facing payments firms today, future trends, as well as their perceptions on regulation, compliance, and payments reconciliation.

Most notably, the survey found that 63% of payments firms believe their regulatory burden will increase over the next two years. This is especially prominent in the US, with almost half (47%) of US respondents acknowledging that compliance expenditure will increase. Meanwhile, in the UK, only 29% of firms anticipate spending will increase – especially as UK firms spend considerably more (£325,000 on average) compared to the US (£304,101 on average) to ensure compliance.

Gordon McHarg, CEO at AutoRek, on the findings of the report said, “While we anticipate the payments sector will double its revenue by the end of the decade, the current recession means payments firms will likely be facing their biggest challenge to date. Keeping operating costs low while new regulations come into play will be crucial, and firms need to continue innovating and adapting to rid themselves of inefficiencies and keep ahead of any negative economic impacts.”

With rising consumer demands for real-time payments, the entire payments industry has been forced to quickly adapt to meet this growing need. The survey found that while most global payments firms will be ready for real-time payments in the next 12 months, there are still stark differences in readiness between the UK and US. US payments firms are more confident in their ability to accommodate real-time payments, with 70% noting that they are already prepared, compared to only 50% in the UK.

While the payments industry has been much quicker to adopt technology than their banking counterparts, 65% continue to use spreadsheets for critical financial control processes. Two-thirds (67%) of US survey respondents reported being overly reliant on spreadsheets compared to only half of UK respondents.

Manual processes lead to inefficiencies, with nearly a third (29%) of US firms noting that their back-office costs grow in direct proportion with growth in payment volumes. This is in direct contrast to UK firms who reported that their back-office costs grow at a slower rate than payments volumes, which is fuelled by greater adoption of back-office automation.

Nick Botha, Payments Lead at AutoRek, added: “Our payments report has demonstrated clear differences between UK and US regulatory landscapes, strategic priorities, and future outlooks. 2022 has been a turbulent year for payments on both sides of the pond, but the variety of payment methods and volumes are still expected to increase shortly – a positive sign. We hope this report highlights challenges and areas of opportunities for the global payments industry.”

Key findings :

• Over 42% of UK-based respondents expect their number of cross-border payments to decrease, compared to 28% of US firms
• Around 14% of payments firms are unprofitable and 33% are only breaking even. US firms are more likely to be profitable than those across the pond
• The key focuses of regulatory scrutiny include customer protection, operational resilience, crypto payments, and data protection. 64% of respondents believe that the US will adopt a similar approach to the UK’s Safeguarding Rules
• More than half (60%) of firms expect payment methods and volumes to increase in the future