To combat fraud, companies are rationalizing their banking relationships and moving away from checks to digital payment solutions. But they’re doing so slowly.
That’s a key finding of the recent “SunGard B2B Payments and Bank Connectivity Study.” Nearly 400 treasury and finance professionals from around the world responded to the survey. Among those with more than $1 billion in annual revenue, 15 percent said their company uses paper checks more than any other payment method. Checks were supplanted years ago as the most common payment method; this year, electronic funds transfer (EFT), wire, and Automated Clearing House (ACH) were each cited by around a quarter of respondents as their most prevalent payment method (see Figure 1, below). Still, the companies that remain check-heavy are making more than 20 million payments per year via paper checks, putting those organizations at significant risk of check fraud.
Worries about fraud are also pushing companies to connect their payments software—whether it’s a payment factory, a treasury management system, or an ERP system—directly to their banks via the SWIFT network. Almost one in three survey respondents larger than $1 billion in annual revenue are currently using SWIFT, and 41 percent expect to be doing so within the next two years.
“Fraud concerns are driving an increase in the number of companies outside of financial services that are moving to SWIFT for payments,” Owens says. “SWIFT was once the domain of the very largest corporates, but the benefits mean the business case is now stacking up for corporates that are large but not the very largest. What typically happens when a company decides to move to a centralized payments platform is that they’re also deciding to replace all those specific bank connections with something like SWIFT connectivity so that they consolidate the bank connectivity piece and the payments piece at the same time.”