Feature insight - delivering payments (UK and globally)
grown to meet that demand and, as the expectation for faster payments has increased, so the fees associated with doing so have decreased to meet the demands without negatively impacting organisations or individuals.” While this may be true, Holloway points out that payroll still needs to remain flexible when it comes to delivering payments and take a distinctly old-school approach where necessary: “I think there is a general move by employers towards workers being paid electronically – probably via BACS, which remains the UK’s largest bulk payment system by far. Further, there is a general acceptance by workers that this is the way they will be paid. “However, there are still many employers and sectors where cash remains king and we must not forget this. Cheque payments are probably on a decline to zero, yet payroll has to respect the employer and worker that wants to pay and be paid this way.” Even with the rise of technology, there is still room for improvement, according to Hughes: “The issue with BACS is that it still takes two days to process payment. You would think with the changes in tech that this would have been shortened, giving us additional time to process the payroll.” “Plus the fact that payments can only be made on banking days,” adds Holloway. “So, of course, there is the fact that bank holidays always have to be taken into account by the payroll department. “While we all enjoy bank holidays, they are actually terrifically inconvenient for payroll departments, as are Saturdays and Sundays, particularly when they fall on payday. You would have thought that a 21st century banking system could operate 24/7.” While he describes the UK payment delivery system as “excellent”, Parsons agrees the limitation of payment cycles “may be seen as restrictive”. He adds that “for larger employers, the maximum payment limits can occasionally cause some concern”. For Davenport, though, the current issues are related to security: “Any system which deals with money, whether personal or business, is at risk of being hacked. Banks and payment delivery companies need to ensure that they have safe and secure systems in place to limit this risk. “The recent introduction of the GDPR
[General Data Protection Regulation] has gone some way to mitigate these risks as many organisations took the opportunity to map their data flows and identify where security could be improved. For payment delivery systems, this could be using secure online portals instead of email as a communication and data sharing mechanism, for example.” So much for the UK and the likes of BACS and CHAPS. Paying employees in different parts of the world adds a new set of acronyms into the mix, such as SWIFT (Society for Worldwide Interbank Financial Telecommunications), ACH (automated clearing house) and SEPA (single euro payments area). Andy Brown, operations director at EQ Global, provides a basic guide: “SWIFT is tried and trusted. There are two types – wires and urgent wires – where funds are sent down the SWIFT network. That takes a varying number of days depending on currency types and so on. For example, with our operation at EQ Global, we can get a US dollar urgent wire same-day payment up until mid-to-late afternoon, although that’s probably because we’re working with an American bank. “ACH is an American system and you can use it for some 34 countries around the globe. As Ruairi Kelleher, chief executive officer of Immedis, explains, you can’t rely on a singular method to pay globally: “We pay into over 130 countries repetitively on a monthly cycle. We break it down into low value and high value. Ultimately, low value from a payroll perspective is the most attractive. “So the low-value rails such as ACH provide a much stronger success rate in terms of on-time delivery and you always strive to use them. But they’re not always available in the more exotic countries, so you are dependent on the SWIFT network. “From the SWIFT side or high-value payment side, it is deemed a higher-risk the different rules and regulations of each country “SEPA is very similar to ACH but obviously under a different name.” ...complexity of complying with
method of payment than a low-value method but sometimes you have no option.” The way to mitigate those risks, according to Kelleher, is in-depth testing: “We would always do multiple payroll cycle test payments on the SWIFT network to get an understanding at local level, all the way down to branch level, of where delays might occur along the chain.” Not only does the delivery of global payroll payments involve different interbank systems, but it also adds layers of complexity. “There are really two payments in the one payment,” says Brown. “It sounds confusing, but if you’ve got £500 and you want to send into the US, there’s a transaction there to get the equivalent amount in dollars. And then those dollars need to be paid to the recipient. So that’s why it’s much more complicated than the BACS payments we’re used to in the UK, both in terms of our process and our expectations.” Then, of course, there is the complexity of complying with the different rules and regulations of each country. The differences with domestic payroll delivery are stark, says Brown: “As an extreme example, we’ve had a situation in Bangladesh where, for each payment, the beneficiary had to complete a form for the Central Bank of Bangladesh and sign it, then present themselves to their bank to be able to get the money into their account.” Money laundering checks can also throw a spanner in the works when delivering international payments. Brown explains that certain names on the payroll could raise red flags because they might share a moniker with someone on the danger list. “However,” he explains, “the vetting systems are such that once a name has been matched and cleared, a ‘false positive’ flag is put on it. False positive in this case is a bit counterintuitive but it means the beneficiary has been wrongly matched with the name on the list. So the system notes the name, bank and country for the payment and the false positive will let the payment go through each time those details are the same. “The only time it gets interrupted again is if something changes on the beneficiary’s side, such as if they change bank or they move, or if certain changes
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| Professional in Payroll, Pensions and Reward |
Issue 44 | October 2018
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