Cash & Liquidity Management

The future of payments, now

Published: May 2020

The COVID-19 pandemic has been testing the skills of treasurers across the globe, and nowhere is this more evident than in how payments are sent and received. Mahesh Kini, Managing Director, Head – Cash Management, Asia Pacific at BNP Paribas explains how adopting options available now to ease the immediate strain can futureproof businesses.

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Portrait of Mahesh Kini, Managing Director, Head – Cash Management, Asia Pacific, BNP Paribas

Mahesh Kini

Managing Director, Head – Cash Management, Asia Pacific

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The last few months have seen an unprecedented shift as businesses, some willingly and some out of necessity, move from traditional bricks and mortar to e-commerce models, says Mahesh Kini, Managing Director, Head – Cash Management, Asia Pacific at BNP Paribas.

Based in Singapore, Kini believes that many Asian countries are a few steps ahead of the rest of the world in trying to integrate the impact of COVID-19 into businesses – the region being the first to face the pandemic – and that what he is seeing in the payments space here, marks the cutting edge of change. “The shift from shop-front business model to electronic e-commerce is one thing that we’ll probably see evolve and become the new normal everywhere,” he states.

In a bricks and mortar world, real-time payments aren’t often seen as a necessity. Indeed, cash reconciliations can be done once a week, or even once a month in some businesses. As a result, the supporting treasury management systems (TMSs) and enterprise resource plans (ERPs) are rarely configured to operate in a real-time environment. The changes forced by the pandemic are testing these ‘analogue’ set-ups to the limit.

There are of course payment systems available to facilitate e-commerce, and Central Banks in Asia have been promoting domestic real time payment systems like FAST and PayNow in Singapore, IMPS, UPI in India, NUCC in China, PromptPay in Thailand, or RPP in Malaysia. “Treasurers need support and advice from banks to manage their transition to these new payment systems,” Kini says. Indeed, there is a need to move towards real-time, or at least near real-time, daily reconciliations too. This, he explains, is because rapid dispatch of goods and services demanded by e-commerce users requires matching reconciliation speeds to avoid credit issues, enabling customers to keep buying.

Paper risk

Problems remain for cross-border payments though. “A lot of countries are still capital controlled,” explains Kini, noting that such payments often require a substantial number of supporting documents and paper flow. He believes that the digitisation of supporting documents will help revolutionise this space too.

In APAC specifically, BNP Paribas offers a digital workflow to help clients send physical documents in an electronic format. Clients are able to scan it to the bank, which is then able to process cross-border payments. “The client stores the physical documents in case the regulators need it in the future, and we keep them in digital format for our own regulatory and audit purposes,” explains Kini.

Arguably, in the current situation, the need for digitisation can be seen across the board. “Companies can go out of business very quickly if immediate changes around adopting e-commerce, new payment channels, and new ways of doing things, are not done,” he says. Decreasing the use of paper through digitisation is one of the main ways to do this. Paper should not be “lining the offices of the clients or the banks”, especially now. With millions of people forced to work from home, the dependency on and the need to exchange paper to complete a transaction is identifiable as a major risk.

Benefits of choice

The necessary changes are far from a negative. A greater choice of payment solutions can lead to significant immediate benefits, particularly when it comes to cash flows and working capital management. BNP Paribas’ cash management platform is able to integrate with many payment services, such as the aforementioned FAST, IMPS, PromptPay, NUCC, RPP etc. , and in addition to receiving funds, it also helps client reconciliations. “We are able to give written permission that comes from the payment system onto ours, and the client can actually upload that directly into their ERP system to be able to do the reconciliation,” says Kini. Immediate access to that cash, when revenue streams are currently so volatile, can be a lifesaver.

When it comes to card payments, BNP Paribas has a global card acquiring proposition from Europe. The Covid-19 crisis showed that e-commerce is a vital new pillar for business continuity, in a socially distanced world. “If a customer wants to set up an e-commerce portal, we are able to give them a simple solution, with 350 means of payments, which allows them to accept transactions, manage data with dynamic reporting and fraud management.”

Building the future, now

The world is likely to be changed forever by COVID-19. When it comes to payments, the effect is, and will be, significant. The necessary adjustments that have been made now just to survive, will continue to provide buyers with a lot more options in the way they do business with the corporate world than they previously had.

Similarly, for sellers, Kini is seeing a lot of corporates necessarily moving very quickly into the e-commerce space. It’s a move that will have a long-lasting positive effect. In retail in particular, he sees contactless payments in rapid ascendance. “I’m not saying that other solutions will completely disappear – some of them will definitely remain in some shape or form – but I can tell now that change is here to stay in the electronic and contactless payment space.”

And whilst many may be thinking that blockchain will revolutionise everything, Kini knows that progress here will take a long time. Businesses will be thinking “the most important thing is to solve the immediate challenge”. They are right, and when it comes to payments, it is something that really can be achieved now. But it’s worth thinking too that the benefits of payments upgrades now will continue long after the threat of the pandemic has receded.

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