Payments have evolved beyond routine money movement into a primary strategic lever for business efficiency, resilience and growth. Today, strategic payments choices directly affect core organizational objectives, including cost optimization, liquidity management, operational resiliency, fraud prevention and supplier and customer experiences.

Evolving compliance requirements, such as ISO 20022 and new NACHA fraud rules, provide an opportunity to revisit your payments strategy. “They should be thought of as a catalyst,” said Sarah Billings, Executive Vice President, Head of Global Payments, PNC Bank. “The organizations that win won't just comply. They'll modernize.”

In the companion webinar to the AFP Payments Guide: Revisiting Your Payments Strategy, underwritten by PNC Bank, a panel of treasury and payments experts discussed the modernization of payments systems and the effect it can have on your organization’s success. Below are the highlights from the discussion.

Key Takeaways

• Regulatory shifts, including ISO 20022 and NACHA fraud rules, present opportunities to modernize payments.
• Payments modernization requires looking beyond basic transaction fees to examine labor, exceptions, reconciliation issues, manual touchpoints and total fraud exposure.
• Future-proofing payments infrastructure relies on early controls, clean payee data, consistent file standards and dynamic fraud mitigation that adapts to changing technology.

Align payments strategies with business objectives

In today’s market, payment decisions affect far more than transaction processing. “Payments now touch almost every major objective a company has,” said Doug Carlson, Senior Vice President, Head of Global Payments Product Management, PNC Bank. “It's not about just moving money anymore; it’s about cost, liquidity, fraud exposure, supplier experience, customer experience and operational resiliency.”

Without a deliberate payment strategy, organizations tend to default to their legacy processes. Treasury teams need to use their payments strategy to establish a consistent framework that balances competing priorities and future-proofs the business.

Treasury professionals are uniquely positioned to drive payments strategy because they have the internal business context, know the right questions to ask to support the business, and have strong relationships with banking partners and other financial institutions. This allows treasury to stay abreast of emerging payments trends and understand how they may impact the business.

“It all comes back to ‘how do we support the business’ objectives?’” said Greg Lattanzi, CTP, Director of Treasury.

Understand what your payments are really costing you

To make strategic payment decisions, the organization has to first be able to visualize its existing payment activity. “You can’t really modernize what you can’t see,” said Carlson.

That means looking beyond transaction fees to examine payment volume and value, use cases, exception rates, manual touchpoints, reconciliation issues and fraud exposure. “Transaction fees are just one piece,” said Carlson. “It’s labor, exceptions, repairs, reconciliation, fraud risk, supplier inquiries — even all the phone calls that you might get from a follow-up.”

Taking a wide-angle view can also reveal operational opportunities. You might discover processes you can automate, and find ways to eliminate bottlenecks and improve coordination among treasury, accounts payable, accounts receivable, procurement, operations and IT.

“That way you have multiple parts of your organization moving together,” said Carlson.

Choose the right payment method for the right transaction

Modernizing payments is “not about replacing one payment form for another,” said Tom Hunt, CTP, Director of Treasury Practice, Association for Financial Professionals. “It's about applying the right payment form with all of the different solutions available.”

Checks, ACH, wires, virtual cards, same-day ACH and instant payments each offer different advantages. The goal is to understand the tradeoffs and use each method intentionally.

“The better approach is really to talk about segmentation,” said Carlson. “Some payments do belong in ACH. Some may be better candidates for virtual cards. Some may justify same-day ACH and instant payments. The goal really isn't to simply eliminate checks. The goal is to move each payment to the payment type that delivers the best balance of costs, speed, control and supplier experience.”

 “The right fit for the right payment is part of a bigger picture,” added Hunt.

Build resilience into the payments process

As payments become faster and more digital, stronger controls should be a parallel advancement. Fraud prevention in particular cannot be treated as static. “What we put in place today is not necessarily going to work six months from now,” said Lattanzi.

Controls increasingly need to come earlier in the payments process. This includes stronger onboarding and change controls, clear approval rules, account validation and monitoring before payments leave the organization.

The rapid advancement of technology in recent years tells us that this adaptability requirement applies to technology also. “The payments environment is not going to settle into one fixed model,” said Carlson. What is needed is not an immediate adoption of the latest technology, but rather “a foundation that preserves that optionality.”

“Futureproofing is really about flexibility,” said Carlson. “It's about clean payee data, consistent file standards, strong controls, a clear decision framework where it makes it easy to add new payment types or respond to new requirements without rebuilding the whole process every time.”

Payments will always have to achieve their foundational task — getting money where it needs to go accurately and on time. But in the current era, that’s just the starting point.