Chips and Fed call for streamlined wire transfers

Chips and Fed call for streamlined wire transfers

The Clearing House Payments Company and Federal Reserve banks have called on payments industry participants to improve the operation of wire transfer systems or risk losing corporate business to ACHs and other alternative mechanisms.

The public and private sector US wire system operators say urgent action is needed to stem the defection of corporate B2B business. The call to arms follows the publication of research into corporate perceptions of wire transfers as a suitable alternative to paper cheques.

The study, which questioned a total of 381 decision makers from a diverse group of companies, found a clear need among corporates for a single remittance information standard to eliminate existing inefficiencies in the process.

"Wire transfer operators, banks and software vendors have an opportunity at this time to bring about change that will ensure that wires continue to remain relevant and deliver the most value to end users well into the future," the report states.

Changes that merit further consideration include:

  • Enhancing payment system operator, bank and software vendor capabilities to include remittance information with wire transfer payments;
  • Supporting a common industry minimum remittance information standard that can be used by companies around the world to move remittance information with the payment (such as the EPN STP 820 and ISO 20022); and
  • Enabling bank cash management systems to integrate more effectively with accounts payable and accounts receivable systems to facilitate straight-through-processing.

The study concludes: "For the financial services industry, the time to act is now, before other payment types become the method of choice for payments that today benefit from the characteristics of wire transfer systems."

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