payment systems and cash management implications

Payment systems and cash management implications

Nicola Coyne Head of Immediate Payments,Barclays Corporate Banking

2 | Payment systems and cash management implications | 25 February 2020

• Cash & digital payments in the new economy

• Real-time payments

• Request to Pay

• The changing regulatory landscape

Agenda


UK Payment industry statistics

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

-

50,000

100,000

150,000

200,000

250,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Volu

me

(000

's) -

CHAP

S

Volu

me

(000

's) -

Bacs

Cre

dits

/FPS

Bacs, CHAPS and Faster Payments total market volumes

Bacs Credits FPS CHAPS Linear (Bacs Credits) Linear (FPS) Linear (CHAPS)

Source: Data obtained from UK Finance; UK Payment Statistic 2018 report & from Pay.UK Monthly Payment Statistic 1990 to Jan 2020


UK Payment industry statistics

Data obtained from UK Finance; UK Payment Statistic 2018 report & from Pay.UK Monthly Payment Statistic 1990 to Jan 2020

£-

£1,000,000

£2,000,000

£3,000,000

£4,000,000

£5,000,000

£6,000,000

£7,000,000

£8,000,000

£9,000,000

£-

£50,000

£100,000

£150,000

£200,000

£250,000

£300,000

£350,000

£400,000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Valu

e in

£m

-CH

APS

Valu

e in

£m

-Ba

cs C

redi

ts/F

PS

Bacs, CHAPS and Faster Payments total market values

Bacs Credits FPS CHAPS Linear (Bacs Credits) Linear (FPS) Linear (CHAPS)


Real-time payments in Europe

SEK

PLN

GBP

BGN

DKK

2,079 Payment Service Providers

from 22 countries

have joined the SEPA Instant Scheme

= 51% of European PSPs

= SCTInst participating country

Key:

Source of data: European Payments Council


SEPA vs FPS initial take-up

0.08%0.64%

1.02%

2.83%

4.39%

5.53%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

Q12018

Q22018

Q32019

Q42018

Q12019

Q22019

Q32020

Q42019

SCT INST volumes as a % of total CT* volumes

0.00%

0.01%0.01%

0.01%0.02%

0.02%

0.00%0.00%0.00%0.01%0.01%0.01%0.01%0.01%0.02%0.02%0.02%

Q32008

Q42008

Q12009

Q22009

Q32009

Q42009

Q12010

Q22010

FPS volumes as a % of total CT** volumes

Source: European Payments Council. *total CT volumes are SCT+SCT Inst

Source: UK Finance; UK Payment Statistic 2018 report and Pay.UK Monthly Payment Statistic 1990 to Jan 2020** total CT volumes are BACS + FPS


What is Request to Pay?

Payer = Authorising PartyPayee = Initiating Party

BeneficiaryPSP

PayerPSP

2. Request for payment

7. Payment sent

5. Approve response

1. 8. 4. 3. 6.

R2P system

Request payment

Funds received

Request authorisation

Approve to pay


How might Request to Pay be used by your business?

Fully electronic invoicing – Efficient reconciliation of credits -reduced processing fees for Corporates

Invoicing



Online purchases are sent to nominated approver to settle – e.g. Parent for Child

Entitlements



Flexibility for customer on payment date – reduced processing fees for Corporates

Continuous card authorisations


Plethora of Regulation

e.g. PSD2, FTR, CoP, Basel III, ISO20022 and Brexit

• How do these Regulations impact cash management?

• Brexit – Does it change anything?

– Euro wires

– SEPA

The changing regulatory landscape


“No-deal” BrexitPost December 31st, if no deal is agreed then the UK will be deemed to have left the EU and the EEA. If that is the case then the possible charging options for a payment from the UK to Europe will be OUR/BEN/SHA (for PSD2 purposes, the UK will then be a ‘one-leg out’ country). SEPA may provide a cost-effective alternative.

Wire Transfers from the UK to the EU

OUR = remitter pays all charges BEN = beneficiary pays all charges SHA = remitter pays remitter bank charges & beneficiary pays their bank charges, ODC = Overseas delivery charge

EU hubPrincipal amount

Charge Amount

OUR €10,000

SHA €10,000

BEN €10,000

Sending feeCharge Amount Deduction

OUR £XX + ODC N/A

SHA £XX N/A

BEN A. Paid by bene

Intermediary feeCharge Amount Deduction

OUR Paid by UK bank

SHA B. Paid by bene

BEN B. Paid by bene

Fee

Charge Amount Deduction

OUR Paid by UK bank

SHA C. Paid by bene BEN C. Paid by bene

Beneficiary receives

Charge Amount

OUR €10,000

SHA €10,000 minus charges(B+C)BEN €10,000 minus charges(A+B+C)

SenderSending fee:

£XXFee:€XX+ Beneficiary

Post-hard Brexit (UK outside EEA)


SEPA paymentsPost December 31st, if no deal is agreed then the UK will be deemed to have left the EU and the EEA. Note that for SEPA the only charging option will continue to be SHA – this is the only option permitted. If the UK is deemed to have left the EU & EEA then banks within the EEA may charge more to send and receive SEPA transactions with the UK

SEPA Direct DebitsSince the UK will be outside the EU/EEA, under Funds Transfer Regulation rules Creditors will be required to submit the debtor address details with every transaction regardless of the debtor location.

“No-deal” Brexit

OUR = remitter pays all payment charges BEN = beneficiary pays all transaction charges SHA = remitter pays remitter bank charges and beneficiary pays their bank charges

Post-hard Brexit (UK outside EEA)Principal amount:

€100Sending fee:

£XXBeneficiary receives:

€100Fee:€XX+


Questions?


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