The systemic importance of high-value payments to banks’ operations and offering – and, by extension, the global economy – means they are almost always a key priority when exploring a new payments product or initiative.
So, what are the specific considerations and challenges that high-value payments present? And what capabilities must payments processing solutions possess to ensure secure and seamless transactions?
What Sets High-Value Payments Apart?
At its core, a high-value payment is exactly what it says on the tin: A transaction involving a large amount of money. But it’s not just the dollar figure that matters. With higher value come higher stakes. If something goes wrong, the consequences can be
huge for the bank, the businesses involved, and wider economic participants.
Consequently, banks must take a different approach to processing high-value transactions. Much like a priceless painting is handled with far more care when moved compared with an average package, additional processes and controls are put in place:
– Manual Intervention: Unlike faster lower-value payments that are typically automated end-to-end, high-value payments might require manual checks or approvals to ensure everything is in order.
– Regulatory Oversight: There are often stricter compliance and reporting requirements, given the potential for money laundering and wider consequences based on stability of high-value payments systems.
– Security: High-value transactions can be a target for sophisticated fraudulent schemes, so banks use advanced analytics and monitoring to catch anything suspicious.
How Does This Affect Payment Processing Solutions?
Given these additional requirements, when building or choosing a payments processing platform for handling high-value payments, banks might wonder: Does it require a completely different system?
Surprisingly, not always. For example, processing a domestic RTGS payment is not that different from processing a fast, no-limit payment (except for the extra checks and possible manual steps for the RTGS transaction).
When it comes to cross-border high-value payments, however, things do get complex and the way the payment is cleared and settled becomes critically important.
Consider a traditional SWIFT payment. The processing solution needs to support all the right reference data for routing the transaction, plus functionality for matching transactions and reconciling accounts. And when dealing with digital currencies and distributed
ledgers, integration with the platforms that issue digital currencies, ones that distribute these and customer digital currency wallets becomes essential.
As such, a payments processing solution is required that is agnostic of the clearing and settlement mechanism, one that can be integrated with existing RTGS and CBPR+ rails used in production today but can also easily integrate with newer payments rails
that may become more prevalent in future years.
What Should a Modern Payments Solution Offer, No Matter the Payments Type?
While these specific considerations for supporting high-value payments must be addressed, it is important that banks do not fall into the trap of thinking in silos. Historically, individual processing flows and solutions have been built for different types
of payments. But in today’s fast-moving payments world, we are seeing increasing convergence due to advances across the underlying market infrastructure.
This means that looking ahead, the real differentiator for banks is not just in supporting high-value payments – it’s about offering a seamless, secure, and adaptable experience for every kind of transaction. No matter what kind of payment, or whether it
is millions or just a few bucks, the right platform should make it seem effortless.
But enabling this experience cannot be achieved through complex and fragmented legacy systems. It demands a single, modern solution that:
– Enables dynamic payments orchestration: The solution should manage the whole payments journey, across the entire payments value chain, regardless of the payments type. Banks must also be able to update the payments processing flow without
any downtime and seamlessly move between different versions of the payments processing flows.
– Supports ISO 20022: ISO 20022 allows for richer, more structured data, which means fewer errors, better compliance, and easier integration with other systems, Additionally, it must be possible to extend the ISO 20022 data model based on
a bank’s custom data requirements.
– Allows for easy integration: The platform should play nicely with the bank’s existing applications, such as core banking, sanctions checking application or bank channels and custom operational dashboards. Ideally, the integration should
be through APIs, with minimal or no changes for the integrating bank applications.
– Is highly scalable and resilient: It should be able to scale efficiently, depending on the transaction traffic volumes and additionally provide resiliency across multiple different instances.
– Supports cloud deployment: Solutions must be cloud-native and cloud-agnostic, enabling deployment on a public or private cloud with no dependency on a single provider.
Lead Payments Forward
While modern payments processing solutions can bolster banks’ capability to enable secure and seamless high-value payments, the benefits extend much further across the organisation. As the ecosystem has evolved, there is now a clear and compelling opportunity
to sustainably and progressively move towards a single, consolidated payments infrastructure that supports any payment, anytime, anywhere. This promises to enhance service quality, promote innovation and bolster resiliency, as well as significantly reducing
costs.
