real time payments
Insights Paytech World-Region-Country

UK Payment Firms Pay More to Ensure Compliance Than Us Firms Finds AutoRek

AutoRek, a reconciliation and finance automation fintech, has released the findings of its global payments survey. The survey looked to understand the current issues facing payments firms, and future trends. This is in addition to their perceptions on regulation, compliance and payments reconciliation.

Most notably, the survey found that 63 per cent of payments firms believe their regulatory burden will increase over the next two years. This is prominent in the US, with almost half (47 per cent) of US respondents acknowledging that compliance expenditure will increase. Meanwhile, in the UK, only 29 per cent of firms anticipate spending will increase. Especially as UK firms spend considerably more (£325,000 on average) compared to the US (£304,101 on average) to ensure compliance.

Impact of rising demands

With rising consumer demands for real-time payments, the entire payments industry has been forced to quickly adapt to meet this growing need. The survey found that while most global payments firms will be ready for real-time payments in the next 12 months, there are still stark differences in readiness between the UK and US. US payments firms are more confident in their ability to accommodate real-time payments. 70 per cent noted that they are already prepared, compared to only 50 per cent in the UK.

Gordon McHarg, CEO at AutoRek
Gordon McHarg, CEO at AutoRek

While the payments industry has been much quicker to adopt technology than their banking counterparts, 65 per cent continuing to use spreadsheets for critical financial control processes. Two-thirds (67 per cent) of US survey respondents reported being overly reliant on spreadsheets compared to only half of UK respondents.

Manual processes lead to inefficiencies, with nearly a third (29 per cent) of US firms noting that their back-office costs grow in direct proportion with growth in payment volumes. This is in direct contrast to UK firms who reported that their back-office costs grow at a slower rate than payments volumes, which is fuelled by greater adoption of back-office automation.

Differences in regulatory landscapes

Gordon McHarg, CEO at AutoRek, commented on the findings of the report:

Nick Botha, payments lead at AutoRek
Nick Botha, payments lead at AutoRek

“While we anticipate the payments sector will double its revenue by the end of the decade. The current recession means payments firms will likely be facing their biggest challenge to date. Keeping operating costs low while new regulations come into play will be crucial. Firms need to continue innovating and adapting to rid themselves of inefficiencies and keep ahead of any negative economic impacts.”

Nick Botha, payments lead at AutoRek, added:

“Our payments report has demonstrated clear differences between UK and US regulatory landscapes, strategic priorities, and future outlooks. 2022 has been a turbulent year for payments on both sides of the pond. Nonetheless, the variety of payment methods and volumes are still expected to increase in the near future – a positive sign. We hope this report highlights challenges and areas of opportunities for the global payments industry.”

Additional findings from the report include:
  • Forty-two per cent of UK-based respondents expect their number of cross-border payments to decrease. This is compared to 28 per cent of US firms.
  • Fourteen per cent of payments firms are unprofitable and 33 per cent are only breaking even. US firms are more likely to be profitable than those across the pond.
  • The key focuses of regulatory scrutiny include: customer protection, operational resilience, crypto payments, and data protection. 64 per cent of respondents believe that the US will adopt a similar approach to the UK’s Safeguarding Rules.
  • More than half (60 per cent) of firms expect payment methods and volumes to increase in the future.

The survey was made up of over 500 mid-level professionals working in payments firms across IT, finance and operations in both the UK and US.

Author

  • Francis is a journalist and our lead LatAm correspondent, with a BA in Classical Civilization, he has a specialist interest in North and South America.

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