NACHA in the US recently approved same day ACH, something consumers and businesses in the UK take for granted. There is plenty if activity in person to person payments, mobile wallets etc. We can save the last 10 feet of effort to buy a coffee, or having to even dig into our wallets for a card by using an expensive phone and watch combo!
But, try and get an inexpensive payment to someone’s bank account and you hit a wall. it could just be the banks I use (very likely) but these banks are big enough and have a large enough footprint, that customer usefulness aside, tackling this would save them money!
Online billpay is free for consumers and bundled into fee-charging small business checking accounts. I’ve seen a few banks use a personal payment service with a small transaction fee. But to pay a bill via online bill pay, you log in and create a payment profile and your bank physically issues a check a few days later and mails it to your payee! So rather than being able to offer a simple ACH payment direct to the recipient’s bank account, we wait a few days for the check to be issued, and then a few more to be mailed and then physically deposited!
Want it
more efficient and less silly? Then pay for a ‘treasury’ module that costs more per month and then configure it with the same gusto as if using an enterprise level ERP. Or, pay a wire transfer charge, set up security and pin codes so you can call in the transfer. Wow.
The icing on the cake – monthly bank charges for balances and crappy payments only slightly less than the cost of a cloud accounting subscription!
In our case, a large cloud infrastructure provider wouldn’t accept a bank debit card payment for our monthly subscription (business credit cards require additional guarantees so most business checking accounts tend to come with MasterCard/Visa debit cards). A UK credit card wasn’t acceptable either (a rant for another time) , so that meant we were left with online billpay. Out of 5 checks, 3 had to be reissued as they never reached the lockbox given. Add up the time chasing, reconciling and reissuing and these payments have probably cost our bank and payee a fair amount of time.
I’ll take a closer look to see whether this a technology problem, culture problem, technical debt, regulation or simply that businesses aren’t demanding more. We know that some of the largest payments players are US based. So, it shouldn’t be technology, should it?
Business banking worldwide is overdue an overhaul. The US has an opportunity to leapfrog itself. Otherwise, Europe and Asia aside, it will be left behind by Africa!