Voice of the Industry

Request to Pay – Don't Wait, Start Today!

Monday 9 November 2020 09:56 CET | Editor: Oana Ifrim | Voice of the industry

Conny Dorrestijn and Mark Hartley, BankiFi: A standalone Request to Pay service (RTP4) offers SMEs and their customers a way to interact over payments, and way more choice

As 2020 makes a turn post-summer to the second half of the year, it has become obvious that the pandemic will not ‘blow over’. What is also abundantly clear is that the ‘real economy’ is suffering and that the ‘markets’ and all of us need to put all hands on deck to support our businessmen and women. 

Our concern for the small businesses and the independent traders and workers (#gig) that always find themselves at the forefront of change, centres mostly around the need to change to a digital business model and in the meantime manage the funds they receive and owe as efficiently as possible, all while they focus on their core business. 

We also see people cancelling subscriptions, regular payments, or direct debits and not always making due or full payments. Given the uncertainty, consumers want more control over what they spend and when. This is causing SMEs, but also charities, a huge challenge. 

There needs to be a way for SMEs and their customers to interact over payments that gives the customers more choice over what they pay and when, and the SMEs a way to offer this choice whilst securing the payment. 

A standalone Request to Pay service (RTP4) offers SMEs and their customers a way to interact over payments, and way more choice. It also gives banks and PSPs a low risk, attractive service for their business customers, whilst obtaining insights in working capital needs thus generating fee-based lending/invoicing income. Moreover, it turns bold social responsibility statements into a tangible ‘we have your back.’

Whilst the Euro Banking Association (EBA) launched in September 2020 a survey into corporate requirements around Request to Pay, there is no reason not to adopt a Request to Pay service today for micro and small businesses that covers a wide range of underlying payment instruments, offers partial payments, and consolidates with a bookkeeping system of the customer’s choice and so much more.

Here are three good reasons to start today helping your business customers where it matters most: 

Action 1 – instant money in the bank 

‘Cash is king’ is today truer than ever. It is no good to have a long list of debtors who pay very late or do not pay at all. The cost of late payments cannot be overstated in terms of pure money, but also in terms of lost opportunities and late hires. Hitachi Capital UK issued a research paper in September 2019 and calculated that late payments cost the UK SMEs GBP 51.5 billion a year. The European Payments Report researched nearly 10,000 businesses in 29 countries all over Europe on the risk, impact, and solutions of late payments. 

A Request to Pay private label scheme allows a bank to offer a full end to end service securing instant receivables or on time via a pre-agreed time schedule for partial payments.

Action 2 – create fair balance and control for all 

Instant money collection is not new, but it used to be tied to a predefined payment product (by the bank) like a direct debit. This is much loved by the issuer (the payee), but not so much by the client (the payer) as we now find out. Many clubs and charities are suffering today from (unnecessary) cancellations simply because people are now very wary about money just leaving the account. If you would be able to offer your customers or donators the opportunity to say yes/no on a monthly basis, some businesses and revenue would be saved. 

Also, direct debits are quite laborious to set up and require a lot of attention on both sides before anything can happen and the ‘Pause’ button does not work in all countries. Request to Pay services delete the sense of being out of control and redress the balance in a world that is fragile enough as it is today. 

Action 3 – free up real business time 

Most entrepreneurs love their job and are passionate about their business, yet they hate the admin and the hassle around it. As a veteran SME banker told us recently: ‘In forty years of SME banking one truth holds up – anything that costs less and saves time gets a thumb’s up.’ 

This insight is not new and used by many players from accounting package providers to (neo) banks and single-purpose fintech apps. There is indeed a lot of new great technology, but we see that people running a business do not prefer to go ‘app hopping’ after or during a busy working day.

They would prefer to make an invoice in the banking or payments app they are used to, send it by Whatsapp or email – whichever tool liked by the company or the client – securely, get notifications when the client has received the invoice, and pay by ‘click’ or on a time schedule. Reminders are issued and dashboards give instant insight.

A market to lose, it is still yours today 

Banks and other licensed payment providers still have the x-factor at hand today, so why not build all that trust and mutual insight through your own hard-earned brand, rather than give that experience away? 

A bank that helps businesses send invoices and receive money instantly is truly standing up for its customers and puts its ‘money where its mouth is.’

The editorial was originally published in Global Open Banking Report 2020, which follows the journey from Open Banking to Open Finance and Open Data Economy, and provides key insights about the benefits of Open Finance for different areas of financial service.

About Conny Dorrestijn and Mark Hartley

Conny Dorrestijn and Mark Hartley are Founding partners at BankiFi. As renowned innovators in Payments & Open Banking, Mark and Conny share a background of over 25 years in a world where banking and fintech meet. They share a purpose on ‘giving business owners their weekend back. By and through the bank’. 

 


About BankiFi

BankiFi offers financial institutions solutions technology to enable their business customer with the right Open Banking solutions at every stage of life: micro, SME, corporate. Banks thus monetise their Open Banking infrastructure and so become the platform. RTP4 is available as a technology solution or as a Service, in partnership. 

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Keywords: Conny Dorrestijn, Mark Hartley, BankiFi, Request to Pay, SMES, banks, Open Banking, payments
Categories: Banking & Fintech | Payments General
Countries: World
This article is part of category

Banking & Fintech