According to official stats, nearly 30 percent of cross border payments initiated through payment gateways have some sort of error in them or are incomplete, and may not get to the destination bank account.
This is a major source of friction for companies actioning hundreds, thousands, or even hundreds of thousands of payments a day and for the payment institutions who are fulfilling these payments.
The causes of payment failure or delay can be human input error, aka fat fingers, the moving landscape of international payment rules and regulations, compliance legislation and individual banks internal compliance requirements and global banking reference data which changes every day.
Apply Financials Validate solution solves these problems and is implemented by its clients as a SaaS solution in a highly secure private cloud both using a REST API and with an intuitive browser. Put simply it is an autocorrect for single payments or payment files, although Mark Bradbury, CEO, is quick to point out the service identifies errors and enrichment needs, and suggests the correct information, but for compliance reasons, doesn’t automatically make the changes. It just tells the user/operative what changes to make, crucially, before they actually press send and will not let a payment go through a gateway until it is correctly entered.
Validate is a highly sophisticated solution but delivered in a simple to deploy API and Browser combination, if a business was to try to do this themselves, they would need data from more than 200 countries, they would have to manage this data on a daily basis and every quarter they’d have to be aware of the changes the tens of thousands of banks, hundreds of central banks and the single and economic group countries make to their rules for payments to be compliant. On top of this Validate comes with a comprehensive reporting suite of tools to monitor where failures occur by individual, country and country in realtime and then calculates the money saved by not making those erroneous payments.
But why does it even matter? Mark explains.
“The margins the payment institutions make on handling a payment are getting thinner, the regulations thicker, and every failed payment is an inefficiency they can live without. Add to this the frustration for the sender and the inconvenience for the recipient not getting money on time or at all.”
For every failed payment, the sender is charged £25. They then also need to manage those failed payments, individually and manually. So they pay to make the payment, pay the exchange rate, pay for the failure of the payment, pay to x the error, then start the process again, paying to make the payment… it’s as painful as it sounds, and when a single change in a banks processes can cause a couple of hundred failed payments in one go, it’s a massive waste of time, effort, and resources. Coupled with that, the recipient gets paid late, causing customer service problems. Typically the cost of fixing a failed payment is £50 and in many cases can be much higher. Multiply that by a few thousand payment errors a year, and it’s unsurprising that the list of clients and service partners for the solution is extensive and ever increasing, including AMEX, CNA Insurance, Cigna, HSBC, Bottomline and even Facebook, although that’s delivered through a third party. Whilst many of the clients are enterprise level, the service is accessible for even the smallest user who does less than 1,000 payments a year.
It’s Compliance as a Service, very simple to access, saves time and money and reduces friction. One of those invisible behind the scenes success stories. Who knew.