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Industry roundup: 21 October

American Express and Coupa to offer virtual card payments in the US

Having first announced a partnership in 2019, Coupa and American Express have announced that US-based customers can now use American Express virtual cards as a payment option with Coupa’s business-to-business (B2B) payments solution, Coupa Pay. This builds on the initial availability of American Express virtual cards in the UK and Australia. The two firms say that the solution is designed to simplify outdated, complex, and inefficient payment processes for businesses around the world.

Demand for the American Express virtual card payment with Coupa Pay is continuing to grow across the UK and Australia, with customers streamlining how they pay suppliers for all spend that goes through the Coupa Business Spend Management (BSM) Platform. As many companies continue to accommodate largely remote workforces for the foreseeable future, the expansion into the US is designed to meet the demand of customers who need a virtual way to pay suppliers and ensure their business continues to be operational.

Additional features of the integration include the following:

  • Extended pre-approvals for card spend, which increases visibility into spend across the organisation.
  • Enhanced security when paying suppliers using virtual card technology that generates a unique American Express card number for each transaction.
  • Increased visibility into the full payment process, while automating invoice matching and reconciliation to improve efficiency.
  • Streamlined payments and greater visibility into payment details for suppliers.
  • Use of the card’s payment cycle to better manage working capital for buyers.

 

FX risk management survey finds hedging programmes challenged by the pandemic

Kantox has announced the findings of its 2020 FX Risk Management Survey, a study conducted in collaboration with Treasury Management International (TMI). The survey evaluated the effect of COVID-19 on FX risk management processes and policies across various industries.

The study found that 52% of those polled described their current FX hedging programmes as either inadequate, partially adequate or non-defined in handling the COVID-19 crisis. Even more (56%) considered that the importance of FX risk management would increase within treasury after COVID, as treasurers realise the impact a suboptimal FX policy may have on the overall results of the company. However, only 30% of respondents have an FX hedging strategy approved by senior management outside of finance, demonstrating that FX is still not seen as an essential strategic task.

Increased volatility was identified as one of the predominant FX pain points during COVID-19 by almost three-quarters of treasurers (64%). This is generally due to a lack of confidence in FX policy. However, 65% highlighted exposure collection and monitoring as the most relevant FX challenge in the past three months. This is usually caused by a lack of systems and clearly defined processes in place.

The study also found respondents are starting to realise the need for technology, with 73% revealing that technology would help in the pre-trade phase of the workflow (forecasting and exposure collection). However, 53% say that insufficient technology budgets, followed by internal resistance to change stated by 46%, are the main two hurdles preventing treasurers from reaching their primary goals.

The survey was conducted with 154 participants and took place from June to July 2020. It included responses from various verticals such as manufacturing, retail and financial services. The revenue of the responding companies ranged from under €20m to those in the €1-10bn revenue bracket, where most participants were placed.

 

US ACH network volume increases 9% in Q3 as commercial payments volume rebounds

The US ACH Network had exceptionally strong growth in the third quarter of 2020, with a resurgence of commercial volume even as some government assistance payments have largely concluded.

Volume on the ACH Network totalled 6.8 billion payments in the third quarter, a 9% increase from the same period in 2019. The value of those payments, US$15.9 trillion, reflects a 13.1% increase. With one additional banking day in the third quarter of 2020 compared to the third quarter of 2019, ACH Network volume compared on a per-day basis increased by 7.3%.

Commercial ACH volume, initiated through the private-sector financial institutions, grew by 9.6%. Business-to-business (B2B) payments jumped by 12.4%. Healthcare claim payments to providers rebounded in the third quarter, likely due to more dental and medical offices reopening. The 94.5 million healthcare claim payments reflect an increase of 8.1% from a year earlier and 18.8% from the second quarter of 2020.

The continued shift away from paper payments to electronic payments was apparent in several categories during the third quarter:

  • Direct deposit increased by 15.8% to 2 billion payments.
  • Person-to-person (P2P) transfers jumped 52%.
  • Internet-initiated payments and transfers increased by 14%.

Additionally, this was the second consecutive quarter in which there was a 24% decline in cheque conversion payments, where a paper cheque is processed electronically as an ACH payment. This is consistent with Federal Reserve data showing a rapid decline in cheque payments. The Fed recently reported a 10.7% decline in the volume of commercial cheques it collected during the second quarter of this year, the largest percentage drop since 1994’s first quarter.

 

Confluence clients complete ESMA MMF article 37 reporting and liquidity stress testing

Confluence, a provider of investment data management automation for regulatory, financial and investor reporting, has announced that its fund administrator and asset manager clients servicing or managing European Money Market Funds (MMFs) have successfully met their Article 37 reporting obligations under the European Securities and Markets Authority (ESMA) Money Market Fund Regulation (MMFR) by filing their Q1 and Q2 reports to multiple European national competent authorities. MMF manager clients are also calculating and storing their Liquidity Stress Testing results, as per ESMA mandate. 

Beginning in Q1 2020, European MMFs are required by ESMA to provide more detailed information on performance, liquidity, stress test results and holdings level-data. Under Article 37 of the MMFR, an extension of Undertakings for the Collective Investment in Transferable Securities (UCITS) and Annex IV AIFMD, large MMFs and their administrators have been faced with the challenge of meeting these disclosure requirements, on a quarterly basis for funds with over €100m in assets under management and annually for smaller MMFs. Individual national competent authorities (including in Luxembourg and Ireland) further customised the ESMA reporting formats, requiring slightly different reports to be produced. 

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