While the world of high value payments may be somewhat niche, these types of payments are critically important to the global economy.
Given that it’s high value payments that keep the wheels of payments and finance turning, banks treat them differently.
In this blog, I’ll explain why high value payments differ from other payment types, the impact that high value payments have on businesses, banks, processors, merchants and everything in between, and highlight the top 6 reasons why it’s crucial for banks to have full insight into their high value payments.
Want to know more about high value payments? Watch the webinar.
What are high value payments?
High value (or wholesale) payment systems are known by many names – each country has different references for interbank and corporate payments – such as Institutional payments, High-Value Clearing Systems (HVCSs in Australia), Large-Value Payments Systems (LVPSs in the US), Clearing House Automated Payment Systems (CHAPS in the UK).
Payments in banking are a commodity item, and these payment types represent the largest part of the world’s payments infrastructure.
They’re critical for:
- Stability of a country’s economy
- The successful operation of financial markets and businesses
- Trust in the banking sector
6 reasons why monitoring is vital for banks
Banks are held accountable when payments systems fail, and customer business is affected. Transaction monitoring holds the key to preventing failures, rectifying them when they happen, and predicting the likelihood of them happening repeatedly. There are six key reasons why monitoring payments is crucial.
1. Regulatory action
History proves that banks are not bulletproof, with famous banking collapses throughout the decades including the 2008 GFC. These events prompted new rules and regulations, and brought to the forefront the need for extra safeguards by actively monitoring payment flows.
2. Market reputation
Reputational risk management in banks is one of the most valuable strategies for a financial organization, as it’s the key to building trust within the industry, and higher customer acquisition. Relevant qualitative factors need to be measured such as lending policy and criteria, product development, key entity risks, and credit risk review and controls. Monitoring high value payment channels is imperative to bring visibility to these and other factors.
3. Customer Trust
Monitoring can reveal a great deal of information about bank processes that can impact customers. Things like slow payment processing, or not reporting payment status to customers, settlement delays or failures.
4. Service level agreements
Breaking Service Level Agreements (SLAs) can be costly for everyone involved, from regulators to customers. Monitoring can create alerts before an SLA breach happens.
5. Customer retention
Advanced monitoring controls helps to meet customer needs and retain valuable customers. Monitoring can reveal insights and information about customer service and support, and ensure that transactions are settled on time.
6. The bottom line
Monitoring can make it possible to achieve a bank’s desired bottom line, ensuring payment efficiency, data accuracy, settlement speed and keeping processing costs down.
The safe, efficient operation of wholesale payments systems is essential as they have an important bearing on a bank’s liquidity, risk, reputation, and regulatory responsibility, as well as a nation’s whole financial system – it goes without saying that monitoring these large value payments systems with the right monitoring solution is critical.
Find out how IR Transact’s High Value Payment solution can help you monitor, manage, and simplify the complexity of your high value payments. Click here.