While almost all organizations will acknowledge that digital processes are generally faster, cheaper, and more secure than physical, paper-based ones, actually implementing such processes in the face of complicated (and fully-amortized) legacy processes and equipment has been challenging for many businesses. The anticipated cost and effort associated with the adoption of new approaches has been no small part of this challenge.
The investment is worth it, however, because payment modernization’s potential to move money with less friction, at less cost, and with greater security than before has implications for the broader business, allowing it to be more innovative, more nimble, and more value-creating.
Let’s consider the payables function. Historically, this has been the domain of bookkeepers, payment processing clerks, and technicians who oversee the scheduling, printing, and mailing of numerous paper cheques to employees, vendors, tax agencies, and customers – a costly and inflexible way of operating that digital processes could significantly enhance. Automated Funds Transfer (AFT) or “direct deposit” was, until recently, the most-recognized option for making money transfers by digital means. But AFT is neither a fast nor simple capability to set up, nor is it a rapid means of getting money into accounts (though it’s certainly faster than cheques). An employer, for example, will need to collect from each employee information about which account they would like their pay deposited into, and this requires the employee to provide their account number, branch number, and institution number – usually by way of submitting a voided cheque (paper again!). Once all this is finished and the employer has provided this information to its financial institution, any given AFT-based transfer will still take one or more days to complete the institution-to-institution process and show up in an employee’s bank account, the money ready to spend.
By contrast, Interac Bulk Disbursement is based on the same simple-to-use platform that Interac e-Transfer uses for millions of instant person-to-person money transfers a year. An employer (or any organization making payments to many recipients at once) doesn’t need to collect any banking details at all; it only needs the recipient’s email address to which payment notifications will be sent. The organization then sends an electronic file with transfer details – recipient email addresses, amounts of transfer, security questions and (securely hashed) responses, etc. – to its financial institution, which then debits the organization’s account, formats the file with XML markup, and provides it to Interac for execution. Because money has already been debited from the sender’s account – under the so-called “good funds” model of bank to bank transfers – funds can be provided to recipients in 30 minutes or even instantly*.
What all this means is that digitally transforming an organization’s payables is no longer a high-cost, time-consuming initiative. Bulk Disbursement is fast to set up, easy and secure to use, and gets funds to recipients much more quickly than any other alternative – and it does so using a platform that individual Canadians are already familiar with.
In addition, it means that the organization can now focus its attention and resources on creating value through …Why would an organization put it off any longer?
* Instant Interac e-Transfer allows recipients to deposit the funds in real-time. Available for select financial institutions and subject to transaction limits.