A Payment System for the Future

The payment space currently is convoluted. Throughout the last decade, many FinTech companies have approached the payments ecosystem by utilizing third party systems that go around the bank. The prevailing sentiment seems to be, “Let’s do something different because payments are so hard to do with bank partners.” Bringing in another third party solution just adds an extra layer of complexity to financial and cash reporting. So presently, many Fintech companies and banks have been focused on  streamlining the payments flow by creating  payment apps or some other small feature.

A lot of that innovation has been focused on the small business and consumer side. 

Companies that are doing 20 million in revenue and above have payment workflows with higher volume and greater complexity, which many payment apps are still simplistic enough to require additional manual steps. And then, of course, those processes get tied within the treasury department.

Payments: A more robust approach

Trovata can access the payment rails of the banks directly instead of establishing workarounds with third-party intermediaries. Trovata feeds beneficiary and account information across these payment rails, empowering users to initiate payments in one, secure platform. This way,  the banks are still the payment providers initiating the actual payments, but the Trovata Platform is sending data to the bank to allow clients to send payments. To summarize, Trovata establishes the payment rails with the banks, gathers data and transactions, and e aggregates it all into a big data platform. 

From there we have an outstanding user experience that modernizes cash management workflows, bbut now, we’re adding a piece within the payments experience to allow API users to not only get all this intelligence, to manage their cash, get cash flow analytics, forecast, all the things we do currently, but now actually transact. 

Instead of going around the bank and reinventing what the bank has traditionally done since Pony Express times, we’re working with the bank to provide a mechanism to do payments in a digital way, through APIs.

Using Trovata’s data analysis tools, clients can observe how cash moves through their company and then orient that movement across various transactions. These tools support better decision-making.

Four Types of Payments

There are a few different ways to initiate payments. The first two methods are the most common. You can send out a wire transfer or you can send out what’s called an ACH (automated clearing house) transaction. These are both electronic payments, or digital payments. One thing to consider, wire payments, utilize older technology, are  more time-consuming, and are also more expensive. Additionally, it isn’t available for larger companies. The other most common method is called ACH. It’s basically a low cost wire, but it enables the company to recall the payment if there are any errors throughout processing. To note, ACH transactions can take like two to three days to process. 

There’s also reliability and speed of transfer. With ACH, there’s sort of this unknown time period where it’s not certain the funds will arrive. Wire payments are governed by more regulations, ensuring a company can always confirm that it was sent. 

To access these payment methods, clients have to either go into the bank in-person or use the bank’s online portal. It’s a separate step or workflow outside of their analysis and other data-intensive processes.

Trovata completely changes that Using the bank’s APIs, clients can send a payment alongside intelligence like beneficiary information, account information, and other detailed metadata.. It’s a much more efficient way to initiate payments and perform analysis. 

A third type of payment is doing transfers between accounts. For example, you can transfer money from one JP Morgan account to another JP Morgan account. Another example, that is essentially a wire transfer because it has to cross different banks, is that you can transfer money from a JP Morgan to an account at Wells Fargo. All of this is typically done in an online banking environment. But Trovata provides these capabilities directly within our platform to ensure you can initiate any payment in one place.

The fourth kind of payment is called RTP (real time payments). This payment method utilizes  a whole new technology, a whole new process, and a whole new infrastructure. RTP is faster and less expensive than a wire, but more expensive than an ACH transaction. Many of the top global  banking institutions got together and made RTP through a consortium, like they did 30 years ago with ACH. One of the advantages of working with the banks instead of trying to go around them is the ability to test and work with emerging technologies like RTP.

Beyond “Payment Apps”

Re-inventing things banks did 100 years ago isn’t the future of Fintech. The real transformative opportunity in the payment space involves utilizing robust APIs to place all of the tools for gathering, analyzing, and taking action on bank data in one, secure platform. More than a payment app, Trovata is a tool that transforms treasury into a strategic driver for contemporary competitive organizations.

If you are interested in seeing what the future of the payments space can do for your company, talk with one of our automated cash management and payments experts today!

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