As the payments ecosystem continues to evolve, accounting departments, treasurers, and other financial decision makers may find themselves questioning which payment types make sense for their business needs – or even which payment types are accessible to them. ACH, wire transfers, and checks are all standard payment methods that are common in business use today, and they can each be leveraged to meet specific business needs or demands. Add to the mix the growing list of immediate payment options, and the picture becomes more complex.
“Even as technology continues to change the payments landscape, it’s important to remember that newer payment types, such as direct-to-debit card payments and peer-to-peer payment options will be leveraged alongside traditional payments, such as ACH, wire, card, and even checks,” said Sarah Billings, senior vice president and head of Payments and International for PNC Treasury Management. “We now have a larger toolbox for payments with new and better options to improve experience and efficiency.”
The need for accuracy and efficiency in payment processes becomes especially clear when considering the limited size of most companies’ accounting or treasury teams. According to a survey PNC Bank commissioned jointly with GTreasury, 70% of treasury departments have five or fewer team members and are already stretched to manage operational processes.1 While there may be opportunities to make use of the full payment solution spectrum – ACH, wire, check and immediate payments – these teams may lack the bandwidth to assess the options and change payment processing flows.
This, according to Billings, is where financial institutions can step in to do the heavy lifting. “Businesses should not have to understand the various payment silos and how they complement each other,” said Billings. “They should simply be able to process payments through their banking partners via the most appropriate payment rail – no guesswork involved.”
At PNC, this process takes place through Intelligent Routing, a service that automatically determines the most suitable payment method to address individual payment scenarios based on factors such as delivery time, cost, or other requirements that a business might specify. Intelligent routing, which won the Celent Model Bank 2023 Award for Payments Processing, allows payments to be sent via wire transfer, Same Day ACH, traditional next-day ACH, and real-time payment (RTP®), and it also provides information back to the business about how each payment was processed, providing confidence and transparency for the payer.
“Solutions like Intelligent Routing reflect the increasingly digital nature of business and the growing expectation for streamlined, automated business processes,” said Billings. “Leveraging technology or financial partners to decision the appropriate payment method provides businesses with more opportunity to explore strategic business opportunities and even evaluate how emerging payment methods, such as immediate payments, can drive business efficiencies and results.”
For instance, while the growth of immediate payments is on the rise – in July 2023, The Clearing House's RTP network completed its 500 millionth transaction2 and the Federal Reserve launched its FedNow Service – some businesses have yet to integrate it into their operations, whether because they think that doing so will add complexity to their payments processes, or because they don’t fully understand how to incorporate immediate payments into their broader strategy.
“As we talk to businesses about using immediate payments, one thing we often hear is that, while they appreciate the immediacy and transparency of it, they’re not sure they can manage incorporating it into their payment processes,” said Doug Sturm-Smith, head of Immediate Payments for PNC. “What’s important to realize is that banks like PNC can ease the transition into immediate payments and significantly reduce any technical or process changes for our clients to adopt and reap the benefits from newer payment types.”
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PNC is here to help you with your payments’ strategy to improve business processes and drive performance. For more information, reach out to your PNC Relationship Manager, or contact us.
