Efficiency and Compliance in Payment Transactions

Efficiency and Compliance in Payment Transactions

Companies face two significant challenges when it comes to payment transactions: on the one hand, efficient processing needs to be ensured. In this case, direct costs such as transaction fees and indirect costs such as personnel or IT expenses are to be scaled back. On the other hand, improving control options in order to adhere to compliance requirements is becoming increasingly important.

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As past experience has shown, both of these challenges need to be reconciled in payment transaction projects. Higher costs in processing payments should not be justified by adherence to compliance requirements. Conversely, savings cannot be achieved at the expense of transparency and controls.

Many treasurers therefore launch modernization projects with the aim of processing payments in a more cost-effective and secure manner. Normally, they rely on small steps and make no attempt to install an ideal payment platform by adopting a "big bang" approach. Each payment should be checked centrally and processed during the final stage. The payment process is fully automated and documented.

Payment transaction projects not involving technological changes are a rarity these days. Treasury systems offer numerous functions designed to aid efficiency and support compliance objectives.

At the very minimum, payments can be monitored on the basis of information contained in account statements. These are automatically loaded to the treasury system by partner banks or via SWIFT and checked for irregularities. In the process, potential fraudulent activities such as cash withdrawals are determined by search rules or gross differences in amounts are identified by applying tolerance analyses to payment amounts.

Although bank account screening is attractive due to its simplicity, controls and corrective measures are nonetheless performed after payment has been made. In principle, greater emphasis should, however, be placed on prevention. The setting up of a payment factory offers an attractive solution. The high degree of centralization of the payment factory allows efficient processing to be combined with process monitoring and compliance requirements. From central user administration and blocking through to embargo list checks, potential cases of fraud can be averted at the outset. From a technical viewpoint, cost-effectiveness is achieved by automation and, from a substantive viewpoint, by payment method optimization or the introduction of on-behalf payments. Consequently, compliance and efficiency form a perfect symbiosis in modern payment transactions.

Guest author: Dr. Martin Nussbaumer, Key Account Manager at Reval

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