I have been on a mission the last week to find out one thing, what the heck is a payment hub? The question is simple enough. But there is no straightforward answer. In this post i share some of my payment hub findings. Keep in mind that my inquiries around a payment hub are with reference to implementing a payment hub in a corporate environment, not at a bank.
Payment Hub – Background
If you’re wanting to know more about a payment hub, it is highly likely that the following issues are causing you problems:
- Multiple, fragmented payment processes and payment related systems
- Too many payment file formats
- Numerous connectivity solutions to send payments and receive bank statements from your banks
- Little visibility of ALL your payments and payment processes
- Various support teams, focusing on particular payment systems/processes
- Recurring payment related issues – consisting of both technical breakdowns and payments that are not straight through processing
- Legacy systems with unsupported enhancements that have been bolted on over a number of years
- ERP, TMS and in-house systems all generating different payment formats and connecting to banks in a multitude of ways
- Slow payment system implementation and integration times
- No cross organisational payment strategy
Sound familiar…? If so, a payment hub (at least the vendors think so!) may be the solution to the above.
What is a Payment Hub?
This is where it gets interesting. I read around the main payment hub providers (in no particular order) to find out more about what a payment hub is – here is what i found:
- McKinsey – Payments Hubs: Redefining the Industry’s Infrastructure
- A Payments Hub, sometimes referred to as an enterprise payments architecture, is an IT system that allows banks to build their own version of a best-in-class payments architecture
- BAI – How to choose the best payments hub
- A payments hub is a flexible platform that enables banks to build their own payments services that can integrate with multiple systems and channels, essentially breaking down the silos present in legacy structures
- Misys – Fusion Banking Payment Manager – Payment Hub
- The payment hub centralises payments and messaging across channels and back office systems to increase straight-through processing and deliver enterprise wide operational control
- Payment hub provides an integrated infrastructure for all payment types and allows you to combine and normalise financial messages from disparate systems to stabilise payment flows and reduce operational risk
- Capgemini – Payments Hub Integration
- A payments hub is seen by a bank as the primary lever to improve efficiency, reduce costs and provide agility in areas such as sourcing models
- Volante – Payment Hubs
- Payment hubs have been conceptualized and designed to replace silos that handle single types of payments. Hubs can take high value, low volume corporate payments and low value high volume consumer payments, card payments, wires, SWIFT and mobile and send payments out across multiple networks, following rules to choose the best route in terms of destination and cost
- Built on modern software, payment hubs provide agility. Because they don’t require constant customization and maintenance, they are less expensive to operate and can readily adapt to new payment types and add new payment connectivity
- Payment hubs with an SOA architecture move banks into modern system architecture so they are better positioned for new business demand
- Bottomline Technologies – Payment Hubs and Associated Implementation Challenges
- Many high-performing organisations are deploying a payment hub to streamline and standardise their payments processing across all enterprise applications, payment types and banks. Acting as a single payment gateway, a payment hub helps increase efficiency, improve control over funds, mitigate risk and increase visibility
- A payment hub manages the interface between all back-office systems, treasury workstations and other systems associated with payment and cash management
- A payment hub is the ideal vehicle to centralise payment activity and provide a consistent workflow process regardless of payment type or system of origin
- D+H – Global PayPlus
- With D+H’s global payment hub solution, financial institutions are able to consolidate silos of legacy payment operations in a common shared payments service that can be deployed globally, yet controlled locally, simplifying operations and reducing operating expenses
- The payment hub solution is built on an ISO 20022- compliant service-oriented architecture (SOA). Its strict adherence to industry standards makes integration with a bank’s existing technology infrastructure fast, easy and predictable. The use of SOA technology will also lead to reductions in the complexity and cost of the firm’s hardware and software
- The payment hub solution, financial institutions are able to consolidate silos of legacy payment operations in a common shared payments service that can be deployed globally, yet controlled locally, simplifying operations and reducing operating expenses
- Tenemos – Payments
- The payment hub provides a harmonized customer service experience and centralized control of all liquidity management across multiple regions within a single system
- The payment hub enables banks to provide their customers a harmonized payment experience. Banks benefit from a 360° view of all transactions in real-time
- Kyriba – The burning need for a payment hub
- Payment Hubs integrate the multiple payment systems, including ERP, which are used within the organization so that all corporate payments, regardless of department or technology, can be approved and transmitted centrally to payment banks
- Approved payments are routed from the Payment Hub to each payment bank regardless of payment type, format or geographic location
- FIS – Payment Hub
- The payments hub aims to cut costs, reduce complexity and improve efficiency. More importantly, it will facilitate the fast and efficient introduction of new payment technologies including contactless, mobile and online by centralizing those changes in a single system.