Deborah Mur, Head of Global Liquidity and Cash Management, HSBC France, highlights some of the latest developments – including a recent collaboration between HSBC and PayPal – and explains how corporate treasurers stand to benefit. She also outlines French corporates’ current priorities and highlights how HSBC France can support European organisations in a post-Brexit world.
Eleanor Hill, TMI (EH): There is a great deal of innovation happening in the payments landscape right now. But are there also ‘under the radar’ developments that treasurers might benefit from?
Deborah Mur, HSBC France (DM): This is an extremely exciting time for the payments industry. Developments such as real-time payments and SWIFT’s global payments innovation (gpi) initiative are rightly receiving a lot of attention. The move away from physical cash and cheques towards digital payment methods is also a significant focus, together with the new collaborative ecosystem being created between banks and fintechs.
What lies underneath all of these trends, however, is the drive by banks, market infrastructures, and new entrants, to improve the payments experience – for the payer and the payee. Since the aim is to make the end-to-end payments process as frictionless as possible, this is certainly a trend that treasurers will benefit from going forward.
EH: Could you give an example of how an improved payments experience might be delivered to treasurers? What is HSBC doing in this space, for instance?
DM: Well, HSBC recently launched a service called Global Disbursements, which went live in June. The solution combines our FX and payments services into one process for cross-border, low-value, mass payments. Historically, these types of payments have involved complex, manual or costly processes – with many companies converting their FX separately. Through Global Disbursements, however, treasurers can make cross-border payments in 130+ currencies from a single operating account with one seamless process.
This means that treasurers can send payments quickly and easily to vendors, clients, expatriates and retirees living abroad or any beneficiary globally. They can also consolidate cross-border payments to effectively reduce the number of foreign currency accounts their organisation needs to hold – saving money, streamlining reconciliation and gaining more control over cash flows. In addition, there are cybersecurity and fraud benefits to rationalising bank accounts.
Alongside international wire payments, the solution also provides direct access to the domestic clearing systems in 68 countries – and corporates only need to supply one payment file to the bank. As well as offering an alternative to cash and cheques, one of the benefits of making payments through local ACHs is that the lifting fees can be reduced. This means that the beneficiary ultimately ends up with more funds, which can only be a positive outcome. In short, Global Disbursements takes friction out of the payments process, making things simpler, smoother, and cheaper.
EH: Which types of company might benefit from using Global Disbursements?
DM: The service has a number of different use cases and should be of interest to any organisation with lowvalue supplier payments in foreign currency, or small expense payments. Public sector pension funds who have beneficiaries abroad, as well as insurance companies who have cross-border claims, could also stand to benefit.
As the gig economy grows, we are also seeing interest in this solution from marketplaces, such as those where freelancers advertise their services. Companies who buy services on those marketplaces often have to make semiregular payments to contractors, but these may well be low-value, cross-currency transactions – which is precisely where Global Disbursements comes in.
EH: HSBC recently added PayPal as a payment option for corporate clients using the Global Disbursements service. What were the drivers behind this move?
DM: Although we already have significant geographical coverage through the Global Disbursements service, we wanted to increase the number of beneficiaries that we could reach. That’s how this exciting PayPal collaboration came about – PayPal has over 237 million accounts worldwide and PayPal payment volumes have grown by around 20% yearly, accounting for 7.6 billion payments. And through Global Disbursements, we can now deliver PayPal instructions to 120 countries in 21 currencies.
We were also keen to improve the customer experience, and it’s very easy to use. Via an Application Programming Interface (API), we can check upfront on whether a particular beneficiary has a PayPal account. Treasurers can therefore pay beneficiaries without knowing their bank account or address details, which can in turn lead to an improved customer experience.
Think about a consumer goods company who wants to provide refunds on or compensation to buyers of their products, for example. In the past, the company would have had to email the customer, or asked them to fill in a form with their bank details on, which would then have taken time to process. With the PayPal solution, the company can pay out the rebate more or less instantly, which improves the customer experience and could improve customer loyalty too.
As such, we see this as an extremely exciting but also important innovation for treasurers, since it solves a number of the challenges often associated with low-value international payments.
EH: How have your corporate clients reacted to the launch of this PayPal solution?
DM: There has been a tremendous amount of interest from corporates looking to reduce the friction in their cross-border payments. Like HSBC, PayPal is a trusted name in the market, and treasurers can see the value-add for their operations. Specifically, the luxury goods sector has been quick to sign up for the new service, but it is applicable across all sectors, and all sizes of company.
EH: What other payments trends do French corporates have on their radar right now?
DM: From the treasurer’s perspective, security and fraud are top of mind when it comes to payments. Social engineering is a growing threat globally. Both corporates and banks are focused on making their systems and processes as robust as possible, implementing additional authentication steps where required. The move away from manual processing of payments will certainly help here, as the potential for human interference is reduced.
Elsewhere, we are seeing interest in the possibilities of open banking, as a result of the Payments Services Directive 2 (PSD2). An increasing number of businesses, especially small and medium-sized enterprises, are curious to find out how the open banking environment will lead to greater collaboration between banks and fintechs - and the rise of alternative payment platforms.
One of the fairly uncommon aspects of the French marketplace is that even small corporates tend to be multi-banked. Yet they do not necessarily have the resources to invest in a multi-bank platform such as SWIFT, or to use secure versions of EBICS, the local market standard for remote data transfer between an organisation and a bank. So, on the back of open banking, there is certainly an opportunity for smaller clients to gain more efficiency in their payments processes, as well as greater visibility over their transactions.
Elsewhere, SEPA Instant Credit Transfer continues to progress. The challenge, however, is that cards are widely used, with great success. And although SCT Inst offers real-time settlement and the potential for fraud reduction, some corporates are finding it difficult to build the business case around SCT Inst at this moment in time.
EH:Looking slightly ahead, what payments trends are corporates hoping to embrace in the near future?
DM: Corporates are on the look-out for solutions that will bring greater operational efficiency into the payments process and reduce the risks associated with fraud. As such, they are continuing to centralise, streamline, digitise and improve processes, but they are also keen to embrace the latest developments in the market, especially those relating to realtime payments and improved transparency over cross-border payments.
SWIFT gpi is therefore an exciting prospect for our clients, given the ability to track the status of an international payment end-to-end. This kind of visibility can also give corporates a better handle on risk management, especially from an in-country cash management perspective – since every organisation will have certain countries on their watch list.
EH: We can’t talk about country risks without mentioning Brexit. Broadly speaking, how advanced are corporate treasurers in their Brexit planning – and what tips do you have to help them prepare?
DM: Given the uncertainty surrounding Brexit, many corporates are understandably unsure how or when to prepare. Nevertheless, all European corporates, and those with operations in Europe, should be preparing for a hard Brexit. They should also be looking closely at their direct activity in the UK – and any activity elsewhere within the company that links back to the UK.
While there is little concrete action for treasurers to take today, treasury teams need to position themselves to be part of internal strategic conversations around Brexit. That means playing an active role in the working group and being able to clearly articulate the potential impact on working capital.
Treasurers also need to start considering the possible impact of Brexit on their bank relationships. The balance sheet of UK banks is going to become highly dispersed as banks look to move their operations to different financial centres. Corporates therefore need to be aware of the level of services they are currently receiving from UK banks, as well as which entities use those services.
In addition, it is important to have a clear picture of any euro accounts currently held in the UK, since the UK will no longer have direct access to euro clearing systems. For SEPA, the UK has already negotiated to become a third-country member; however those companies with euro accounts in the UK who undertake high volumes of SEPA payments may want to consider moving their accounts to the Eurozone.
EH: On that note, what payments and cash management capabilities can HSBC France offer to clients – especially those looking to shift their euro accounts in preparation for Brexit?
DM: HSBC has tremendous capabilities here in France, including being connected to the euro clearing system, and all of the low-value clearing systems across Europe. As such, we already have the capabilities to support any clients looking to transition accounts across to the Eurozone, and can make that process as painless as possible. Moreover, we are enhancing our local capabilities in France for our EEA clients and will be rolling out new liquidity management and cards solutions within the next six months. These are products that are already available in the UK, so have been tried and tested – and will provide clients with a consistent experience.
As the largest international bank in France, we can also offer a full suite of card acquiring capabilities, which is what clients moving from the UK to France will expect. All of this is precisely why I say that HSBC’s capabilities in France are one of the world’s best kept secrets!
We are seeing interest in the possibilities of open banking, as a result of PSD2.