For years, Australian businesses have relied on banks to provide essential payment solutions. These traditional products and services, while still vital, may no longer be enough on their own to support the fast-paced, digital-first world in which companies now operate. However, when paired with newer fintech innovations (and innovators), they create a robust, future-proof payments ecosystem.
As author, I have spent many years as both a buyer and supplier of payments solutions and services. Over 30 years in the banking domain wearing my Head of Transaction Banking hat, evaluating many payments vendor supplier pitches and proposals. More recently, 10 years in Fintech, pitching those services back to corporates and banks, and with all respect to procurement colleagues and community; seeking to find the right balance across business, technical and commercial requirements and outcomes.
In terms of Payments Services Procurement, I am referring mainly to the following as representative of the major payments services and solutions between Corporate and Government merchants (payees) with both consumer and business (payers).
Electronic Funds Transfer (EFT): EFT remains one of the most common methods for transferring large sums of money between accounts. It's used for payroll, supplier payments, and vendor disbursements for domestic and international payment transfers. While EFT is reliable and low-cost, it often lacks the speed and flexibility (ie. weekdays / overnight settlement) needed in today’s dynamic business environment.
BPAY: Whilst only around 5% of total non-cash payments, BPAY remains a widely recognised payment platform in Australia that allows businesses to pay bills and settle invoices conveniently and securely. Many Australian businesses continue to rely on BPAY to manage accounts payable and make bulk (batch) payments.
Direct Debits: Still currently the primary method to automate recurring payments, such as payroll, subscriptions, and other routine transactions (representing around 6% of total non cash payment transaction in Australia). It helps businesses maintain smoother cash flow management by eliminating the need for manual intervention.
Debit Cards: Debit card payments still dominate and represent about 55% of all non-cash payments in Australia, according to the Reserve Bank of Australia (RBA). For businesses, debit cards are a secure and efficient method to receive payments both online and in-store. Funds are typically available immediately, making them ideal for businesses that require fast access to customer payments.
Credit Cards: Credit cards account for ~20% of all non-cash payments in Australia, and remain a key tool for businesses to receive payments globally. Credit card transactions tend to take slightly longer for settlement compared to debit cards but offer benefits such as customer protection features (e.g., chargebacks) – albeit not an ideal outcome for merchants.
Cash & Cheques: Whilst still important and in use across a number of sectors and demographics, represents now less than 10% (cheques 1%) of all payments.
Despite the continued importance of these legacy core products, businesses are increasingly turning to newer Fintech payment solutions that offer enhanced innovation, CX, speed, flexibility, and functionality.
The Rise of Fintech and Paytech: Enhanced Payment Features and Solution Engagement Flexibility
The rapid growth of Fintech and Paytech solutions has revolutionised how businesses can now explore, approach and source payments services. These technologies (and many more providers) now enable businesses to adopt highly specialised solutions that can streamline payments, improve security, and enhance the customer experience (better, faster and at lower cost).
Key innovations that are reshaping the payments ecosystem include:
Real-Time Payments (RTP): The New Payments Platform (NPP) in Australia enables instant payments, 24/7. Services like PayID and PayTo allow businesses to transfer and receive funds in real time, significantly improving cash flow management and instant reconciliation. We see the demand and utilisation of NPP enabled "business account" products and services rapidly growing, particularly with the RBA stated goal for windup of Australia's major current payments infrastructure platform in 2030 - the Bulk Electronic Clearing System (BECS) - moving onto the New Payments Platform.
Payment Gateways and Digital Wallets: Modern payment gateways enable businesses to accept payments through a wide range of methods, including digital wallets, bank transfers, and even cryptocurrencies. These options provide more flexibility for businesses and cater to customer preferences for alternative payment methods with mobile / digital payments now representing one of the largest and fastest growing payment channels of choice.
Fraud Detection and Prevention: Fraud prevention has become a critical area of investment for both banks and fintech companies. Machine learning and artificial intelligence are now widely used to detect and prevent fraudulent transactions in real-time, ensuring both businesses and customers are protected. Current initiatives such as Confirmation of Payee is another good example of bridging legacy to modern payments solutions as confirmation on payee for (BSB / Account) is already actually available and embedded in PayID enabled payments.
Customisable Payment Solutions: Unlike traditional banks, which offer more standardised services, fintech providers can tailor solutions to suit the specific needs of a business. This allows for better integration with internal systems (e.g., ERP and accounting software), enhancing operational efficiency and providing a better customer experience.
The Evolving Role of Banks: Innovating with Global Real Time, Digital Currencies and Stablecoins
While Fintechs are mostly at the forefront of payment innovation, traditional banks are increasingly embracing the evolution of the payments landscape, particularly with the rise of digital currencies and Stablecoins and some emerging but limited real time payments for business solutions.
Banks are investing also in these innovations to enhance their payment offerings and stay competitive. Digital currencies and Stablecoins, which are cryptocurrencies tied to a stable asset like the US or Australian dollar, are being explored as alternatives to traditional payment methods. These innovations are gaining traction due to their ability to provide faster, more secure, and cost-effective transactions.
For example, Stablecoins can potentially reduce the cost of cross-border payments by bypassing traditional intermediaries and offering more predictable transaction fees. Banks are also leveraging blockchain technology to offer faster settlement times, embedded smart contracts, improved transparency, and reducing the risk of fraud.
Despite these developments, the adoption of digital currencies and Stablecoins remains in its early stages, and regulatory frameworks are still evolving. However, the active involvement of banks in this space signals their recognition of the importance of emerging technologies in the payments sector.
Key Considerations for a Modern Enterprise Payments Solution RFP
When sourcing payments solutions, businesses must evaluate a range of factors to ensure they select the best providers across multiple functional, operational, financial and risk considerations.
A modern Request for Proposal (RFP) for Payments Services we suggest should address (as an overarch to specific product and services requirements) the following 7 key assessment factors:
Capability: What payment products and services does the provider offer? Can they support both traditional and emerging payment methods such as NPP enabled real-time payments for merchants and consumers and future innovation perhaps even into digital currencies and assets. Consider benefits of niche specialists vs suppliers who may offer more product but less expertise in a particular payments solution area.
Capacity: Can the provider scale their solution to meet current and future business needs? Are their systems capable of processing high transaction volumes and supporting new payment methods? What has been the recent track record on actual customer implementations?
Credentials: Does the provider have a proven track record of delivering secure, innovative payment solutions? Are they experienced in working with businesses of your size and industry? Do they have strong and sustainable financial position to ensure ongoing viability?
Commercials: What are the costs associated with the solution, including integration fees, platform fees and transaction fees? Do the provider’s pricing models align with your business’s budget? Considering also the payments integration and implementation time and resources costs where Fintechs may offer more speed, flexibility and agility (to lower overall payments solutions costs).
Culture: Does the provider’s organisational culture align with your company’s values, especially regarding customer service, security, and innovation? What is going to be like to work with the supplier ongoing, evidenced with recent positive customer references?
Compliance: How does the provider manage regulatory compliance, including adherence to industry standards like PCI DSS (where relevant), AML/CTF, AFSL, CPS230, Soc2, ISO standards, cybersecurity and data protection regulations?
Collaboration: Is the provider committed to working as a true partner with your business, offering flexible and scalable solutions that evolve with your needs and the changing payments landscape – with a real understanding and alignment with your core business goals and priorities?
By considering these factors, businesses can ensure they select the right partners to support their payments needs today and into the future.
We have heard from a number of Fintechs, whilst being aware of Payments related RFPs in market; they felt they were not sure if/how to respond because of the basic construct of the RFP / Tender response requirements and structure itself.
In a typical Transaction Banking and Payments RFP, we see many enterprises (public and private) still seeking a single provider for solutions across core banking, cash management, deposits and payments. We therefore suggest now splitting "Payments" related Request for Proposal (RFPs) into sections that provide the needs of banks as Authorised Deposit Institutions (“ADI’s) for core banking and legacy payment services, while offering Fintechs the ability to respond to specialised solutions in real-time payments and analytics, enhanced payer/user experiences together with accelerated technical integration support. Each should continue to be considered on critical areas of fraud, risk and compliance management.
If and where Banks and Fintechs may both respond to elements of payments product capability requirements our experience suggests progressing both to a further stage of seeing a demonstration of the proposed solution in action (particularly from an end user payer experience perspective).
This approach combines the reliability, stability and security of banks with the innovation and flexibility of Fintechs, creating a more tailored and efficient payments solution ecosystem.
Managing Multiple Payments Service Providers: Complexity and Integration
As businesses embrace a diverse range of payment solutions from both traditional banks and fintech providers, managing multiple vendors also becomes an important consideration. While integrating different solutions offers significant advantages, it also introduces complexity to management of the enterprise payments eco-system.
Here are some key strategies for managing multiple payments service providers:
Centralised Vendor Management: Assigning a dedicated team or individual to oversee payments-related relationships ensures consistency in managing contracts, service level agreements (SLAs), and communication across different vendors.
Interoperability: It is essential that all payment systems, whether from banks or Fintechs, work seamlessly together. Integration with existing business systems (e.g., ERP) is crucial to ensure that payment processes are streamlined and errors are minimised.
Flexible Contracts: Given the rapid pace of innovation in payments technologies, businesses should ensure that contracts with service providers are flexible, allowing for the addition of new payment methods or features as needed.
Consolidating Data: With multiple providers, businesses must ensure they can consolidate payment data from all platforms into a unified system. This will allow for better visibility into cash flow, customer behaviour, and operational performance.
By managing multiple payment service providers strategically, businesses can optimise their payment infrastructure to support both current and future needs.
Conclusion: Future-Proofing Government & Enterprise Payments Procurement
The payments landscape is undergoing rapid change, and businesses must evolve to remain competitive. By integrating traditional banking services with fintech innovations, including real-time payments, cards security innovation and blockchain, businesses can create secure, efficient, and scalable payment systems. A mixed approach, incorporating multiple service providers, offers the flexibility needed to meet both operational requirements and customer expectations.
Managing multiple providers can be more complex, but with a strategic approach, businesses can optimise their payment infrastructure and ultimately customer (payer) experience for better outcomes. By considering key RFP supplier / vendor evaluation aspects of - capability, capacity, credentials, compliance, commercials and collaboration, businesses can future-proof their payment systems and stay ahead of the competition in this dynamic environment.
So, welcome to the new age of Banks + Fintech + PSP technology solutions to optimise payments efficiency, experience and economics for your business.
Top tip – perhaps also ask your current primary transaction banking provider about their Fintech partnerships in their payments solution eco-system also.
Whilst positive to see early signs of some Government and Corporate Enterprises already embracing the above, we still see many more opportunities (and need) to re-think and adjust the structure and approach to Banking & Payments Services RFIs and RFPs – resulting in a better outcome for all.
…and at artipi.com.au we welcome the opportunity to support and assist on all of the above.
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