New Report: Benefits of Wire Transfer Remittance Data
A new report from Aite Group describes the potential benefits of introducing structured remittance information to wire transfers. It examines expected market adoption of structured remittance and discusses potential implementation challenges for banks and vendors. It also highlights the findings of two surveys – one from the Association of Financial Professionals (AFP) in 2006 and another conducted jointly by the Federal Reserve and The Clearing House in 2009 – of business needs with regard to structured remittance data in wire transfers, as well as findings from Aite Group’s own qualitative interviews with several banks and technology vendors that support wire transfers.
Currently, wire transfers provide limited remittance information with payments, and the information provided is free-form, meaning that it is not machine-readable and cannot be automatically applied to recipients’ receivables, credit management, and treasury systems. Wire transfers are currently the only major payments type that does not support the provision of business-to-business (B2B) remittance information alongside the movement of funds. The Fed and The Clearing House have undertaken an initiative to remedy the situation, adding structured remittance data to wire transfers, but volumes for wire transfers are low and remittance data is not a determining reason for selecting payment by wire transfer.
“Knowing the buyer that paid each invoice, the amount paid, and the details regarding any discounts or concessions taken is necessary to updating a receiving company’s accounts receivables and credit management systems,” said Nancy Atkinson, senior analyst with Aite Group and author of this report. “As a result, Aite Group believes that the provision of standardised remittance data along with the payment is, in theory, generally a good thing. Aite Group also thinks that the cost to add remittance information to existing payments methods (e.g. wire transfers) should be weighed against the benefits of adding that information before doing so is made mandatory for banks.”