Customers need access to methods of paying money, either locally within a country or cross-border. Payments can be electronic or paper, individual or in bulk and support either the customer’s external trading or their own internal financial management
Most commercial business is settled using domestic payment methods from locally-held accounts. The customer thus requires access to the local payment methods.
Characteristics of these payment methods are:
- Relates to day-to-day trading.
- Settles a commercial invoice.
- Low to moderate value.
- Not urgent.
- Can be reversed.
- Processed in bulk or “batches.”
- The payer may not have to pay interest to the receiver if the payment arrives late.
The actual services under this category include cheques, giro transfers and sometimes cash. Most of these services are subject to and reflect local clearing and regulatory rules.
IBOS banks, being major domestic banks, have a large market share in these activities in
their own countries and can therefore demonstrate advantages:
- Direct member of all relevant clearings
- Good economies of scale
- Access to later cut-off times
- Ability to recall a payment prior to settlement at a later time than a sub-participant
- A proportion of collections will be book transfers and bypass the clearing
Any such payments, where they exist, can be initiated out of an account held at an IBOS bank from within the country concerned, using the electronic banking platform of the IBOS bank or the appropriate way of initiating such a payment:
- Card or e-money payment, using the card itself
- Cheques via a chequebook, continuous stationery, or an outsource cheque printing service
Where it is appropriate to do so, the payments can be initiated on the electronic banking platform of the customer’s Host Bank and transmitted through to the Account-Holding Bank.
The two payments types generally available are:
- High-value transfer through the local urgent clearing system
- Low-value transfer through the local ACH clearing system (where there is a separate one)
In addition customers will have certain payments that are urgent or high-value. These often related to the Treasury Management activity of the company i.e. dealing with the amounts left over when commercial collections and disbursements have been made.
The characteristics of such payments are:
- Relates to treasury or money management activity.
- High value.
- Lower volume.
- Not reversible.
- Processed individually.
- The payer has to pay interest to the receiver if the payment is late, i.e., after the “contractual value date.”
- Generally needed to make a payment into another country.
- Often requires central bank reporting
The IBOS cross-border payment services ensure that intercompany transfers into related accounts at other IBOS banks are completed within minutes of arrival, are immediately available to the recipient, are cheap and visible.
Again, it is possible for the transfer to be initiated on the electronic banking platform of the customer’s Host Bank and transmitted through to the Account-Holding Bank for execution, as well as being initiated on the Account-Holding Bank’s electronic banking platform.
Customer objectives regarding disbursements include:
- Taking advantage of available payment options to make the lowest cost payments possible.
- Paying the correct beneficiary, where and how they requested.
- Paying as late as possible to leverage the time value of money, consistent with reputation and relationship.
- Minimizing the costs and time in actually getting the money to the beneficiary.
- Tracking where the money is, if the beneficiary asks.
- Receiving advice/proof that the money was paid, for the client’s own reconciliation purposes.
IBOS’ services enable these objectives to be met, both in the low-value and high-value payments, and for both local and cross-border activity.