AutoRek evaluates readiness for real-time payments

Auto Rec launches its predictions for the future of payments and regulation in its latest survey.

AutoRek, a reconciliation and financial automation fintech, has released the findings of its global payments survey regarding real-time payments.

The survey defines the most relevant problems facing payment companies today. These include future trends, regulation, compliance and payment reconciliation.

The responses include 500 mid-level professionals working in payments firms across IT, finance and operations in both the UK and US.

On course for regulation

The survey found that 63 per cent of payment institutions believe their regulatory burden will increase by 2024.

This is particularly prominent in the US, where 47 percent of American respondents acknowledge that compliance costs will increase.

In the UK, however, less than 29 percent of companies expect an increase in expenses. This is especially true given the various costs of compliance.

UK firms spend an average of $400,000 on ensuring compliance, compared to an average of $350,000 in the US. As such, 64 percent believe the US will take a similar approach to the UK’s protection rules.

Customer protection, operational robustness, crypto payments and data protection are expected to be key focus points for future regulation.

Ready for real time?

With increasing consumer demand for real-time payments, the entire payments industry has been forced to adapt to meet this growing need.

While most global payments firms will be ready for real-time payments within the next year, there are still large differences in readiness between the UK and the US.

US payments firms are more confident in their ability to accommodate real-time payments, and 70 percent are already prepared. In comparison, only half of UK firms feel prepared.

As for the survey’s other payment predictions, 42 percent of UK respondents expect the number of cross-border payments to decrease, compared with 28 percent of US firms.

Correspondingly, 60 per cent of companies expect that payment methods and volumes will increase in the future.

Up for automation

While the payments industry has been much quicker to adopt technology than its banking counterparts, 65 percent continue to use spreadsheets for critical financial control processes.

Over two-thirds of American respondents admitted to being overly dependent on spreadsheets. Only half of British respondents admitted the same.

Manual processes lead to inefficiencies, with 29 percent of US firms noting that their back office costs grow in direct proportion to growth in payment volume.

This is in direct contrast to UK firms who reported that their back office costs are growing at a slower rate than payment volumes. This result is driven by the wider use of back office automation.

In this sense, 14 percent of the payment companies are recognized as unprofitable, while a third only break even. The survey found that American firms are more likely to be profitable than those across the pond.

“While we expect the payments sector to double its revenues by the end of the decade, the current recession means payments companies are likely to face their biggest challenge yet,” confirms Gordon McHargCEO of AutoRek.

“Keeping operating costs low while new regulations kick in will be critical,” he continues. “Companies must continue to innovate and adapt to rid themselves of inefficiencies and stay ahead of any negative financial consequences.”

Nick Bothahead of payments at AutoRek, adds: “Our payments report has shown clear differences between the UK and US regulatory landscape, strategic priorities and future outlook.”

Botha recognizes 2022 as a turbulent year for both UK and US payments. Despite this, he reassures that a number of payment methods and volume are still expected to increase in the near future.

“We hope this report illuminates challenges and opportunities for the global payments industry,” concludes Botha.