Could it help the UK's corporates weather the current economic storm?
When the Faster Payments Service (FPS) was launched in May last year, it was a widely anticipated scheme allowing consumers to make same-day payments for Internet and telephone services. However, a year on from its introduction, it is fair to say that while
some banks involved in the scheme report that almost 100 per cent of their bill payments are now made via FPS, roll-out across all member banks has been patchy. It therefore comes as no surprise that the Office of Fair Trading views the introduction of FPS
as a disappointment with a recent report suggesting that consumers have missed out on up to £82 million worth of interest due to slow introduction of the service.
From mid 2009, corporate organisations will have the option to directly initiate Faster Payments for their customers via Direct Corporate Access (DCA). But a question remains - will corporates want to make use of this service following the challenges faced
during the consumer roll-out?
Yet, it's important that corporates realise the associated benefits. Namely, the same-day payments service means that corporates no longer have to release funds three days in advance of the payment date. In the current climate, this should be an attractive
proposition, especially for those companies with a large number of suppliers, such as the retail and manufacturing sectors which may currently be struggling with working capital issues. In addition, the ability to transfer the money into a corporate customer's
account on the same day can also be a powerful differentiator.
For the corporates to reap the benefits however, they must take heed of one of the main lessons learnt from the consumer roll-out: payment systems must be able to validate account details and identify where a Faster Payment can be made if corporates want
to avoid the risk of failed payments If this lesson is heeded, then corporates have the opportunity in FPS to reduce costs, optimise working capital and improve customer service and customer differential. Surely, a no brainer in today's climate?
Stephen Hawkes, Product and Marketing Manager, Experian Payments