While the volcanic fall out of the financial crisis reshaped the world of finance and investment banking, the same kind of transformational disruption is threatening to change the payments landscape. With the emergence of crypto currencies like Bitcoin in e-commerce and the possibility of players such as the UK governments serving as a centre for virtual currency trading, I can already see smoke forming around the crater. At this point, corporate treasurers may want to take notice and begin a review of how their treasury technology could support a more nimble payments landscape – one that will make room for new currencies, like the Bitcoin.
Consider how e-commerce has significantly changed significantly in the past few years. Players like PayPal, an eBay Inc. company, or the Ripple network enable money transfers nearly free and in real time through the internet. Under the credo to “continue to be at the forefront of the digital payments revolution,” eBay CEO John Donahoe signalled in June that PayPal will integrate Bitcoin into its payment network “very soon”. And in August, the UK chancellor George Osborne announced that officials have launched a review for turning “the UK into a centre for virtual currency trade“. These bold moves may prove to be the next big push for the adoption of crypto currencies.
Better SaaS than Sorry
Whether a treasurer believes that Bitcoins will be part of the FX portfolio or dreams of global payments sent through the Ripple network in real-time, it is important to keep these possibilities in mind, particularly when investing in new payments technology. Treasurers should not only consider their short-term needs, but they should also make sure their new payments technology is flexible, and can accommodate any new changes that might occur in the payment landscape.
In general, payment technology should enable treasurers to:
- Gather all payment information in a central point
- Streamline global payment processes
- Optimise payments execution through payment factories or netting
- Add new currencies into the running system
- Integrate new payment formats, channels and networks and
- Upgrade new capabilities easily.
SaaS-enabled payment systems would allow the integration of networks like PayPal or Ripple just at the time crypto currencies may become relevant for corporations. A multi-tenant SaaS system makes new functionality easy to roll out to all clients at the same time, preventing the need for any one client to wait in line to receive the upgrade.
At Reval, new currencies as well as corresponding market data feeds become available for all clients on an its integrated SaaS platform, enabling global cash positions, liquidity forecasts, FX risk analysis and hedge accounting reports. With a recent Reval survey reporting that 66 percent of treasuries are planning investments in new payments technology, corporates would do well to first consider how quickly they could adapt to a new payment environment. Without this ability, they may find themselves lost on unrecognizable terrain.