On March 17, 2022, SME Banking Club, together with Charlie-India, organized a webinar on the topic of e-invoicing and real-time payments integration.
At the beginning of the webinar, Katalin Kauzli (Charlie-India) noted the very simple but crucial needs for SMEs that are connected with daily financial management: getting paid in time, paying to the employees and subcontractors in time, having real-time information from one single application for unpaid receivables and payables and VAT obligations that must be paid, etc. How banks can address these needs? By implementing a new solution that integrates real-time payments with e-invoicing.
Katalin Kauzli emphasized that providing an integrated offer for the SME segment banks will not only give a very useful tool for SMEs but will generate additional revenues and cost savings using invoice data.
After that Olivier Denis talked about the distribution of payment methods among European countries. SEPA Credit Transfer today is happening within 1/2 days settlement during working hours. SEPA Direct Debit requires mandate (often with paper-based processes) and exception handling, which is challenging even for large corporates and is not a realistic option for the SME segment.
SEPA Instant Payments and domestic instant payment schemes for non-euro countries sort many limitations of the existing payment methods in Europe today. And Request-to-pay on top of SEPA Instant is a real game-changer for SMEs in the B2B and B2C market in particular for e-invoicing business.
Although +/- 70% of all the banks in Europe are connected to instant payment Automated Clearing Houses today, not all the banks in Europe offer yet Instant Payment to all retail customers and SMEs. In some EU countries, Instant payments are considered as the “new normal” while in other countries Instant payments are still considered as an optional and premium service marketed differently. However, with the competitive push of Fintech and PSP offering embedded finance and Openbanking services for SEPA Instant, we can expect global adoption massive traffic growth of SEPA Instant in Europe soon.
The new request-to-pay scheme (R2P) for instant payments provides the ultimate solution for the SME segment with a push invoice payment method having both bill/invoice details and instant payments and gives:
- Visibility of what the SMEs are paying and to whom;
- Flexibility to select conditions and adapt the payment date and amount;
- Control to decide if/when they pay or don’t pay;
- Security/Trust of bill /payment details;
- Fast and easy to use (no paperwork for direct debit mandate signature) ;
- 24/7/365 availability for the payment service;
- Automated transaction matching for invoices and payments;
- Much more favorable costs for the payment transactions.
The above mean quality, convenience, certainty, and transparency, as well as improved communication – all these aspects are advantages of instant payment with RTP for SMEs. RTP is a viable alternative for high-value payments for merchants in e-commerce.
Why should banks implement integrated real-time payments with e-invoicing right now?
Request-to-pay service is already supported by the SEPA Instant Payment Scheme and by several domestic payment schemes.
The next three years will see a surge in e-invoicing mandates in Europe and worldwide. The change is happening with or without banks taking their share of it, while it is a huge market to address: In Europe 14 billion e-bills/e-invoices in 2021.
How banks can provide value to SMEs in this area:
- SMEs need easy-to-use products for their day-to-day financial administration and management – issuing customer invoices, processing and 1-click payment of supplier invoices, easy access for invoice finance;
- Such an application can be a real-time and single source of information for the SME owner about payables, receivables, and forecasted cash-flow position of the company.
How can banks benefit from such an application
- Bank can increase customer loyalty by solving a huge pain point for SMEs with an end-to-end solution for their problem
- Banks can digitize their own processes for core banking offerings using invoice data:
- Initiate or request payment from invoice data
- Data based digital financing
- Banks can use invoice data to get additional insights for the banks, which they can use to offer customization and make credit decisions.
- Build better risk models using invoice data
- Models for cash-flow projections for offering financing at the right time.
To learn more details, watch the full webinar below: