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What a supplier payment actually touches on its way out

Ngozi OkaforHead of Payment Operations11 min read

When a payment takes two days, the natural assumption is that money is slowly travelling somewhere. It is not. The money is sitting still while a sequence of checks and cut-off times run their course.

Understanding that sequence is the difference between a finance team that can tell a supplier when funds will land and one that can only apologise.

One: validation

Before anything moves, the beneficiary details are checked against the format the destination country expects. An IBAN has a checksum. A US routing number has a specific length and a check digit. A Nigerian account number can be verified against the bank's own directory.

Most payment failures that look mysterious are caught here, or should be. A provider that validates at this stage saves you a failed payment two days later.

Two: screening

The payer, the beneficiary, and often the reference text are screened against sanctions lists and internal watchlists. This is a legal requirement, not an optional risk control.

Screening is fast when it returns nothing. When it returns a possible match, a human has to look at it, and that is where a payment can sit for hours. Good screening is tuned to produce few false positives, because every false positive is somebody's payroll sitting in a queue.

Three: funding and conversion

The source currency is debited and the destination currency is bought. If the provider holds liquidity in both currencies, this is instant. If they have to go to the market for it, the payment waits for a market that may be closed.

This is the single biggest reason that a payment sent on a Friday evening lands on a Monday. Nothing failed. The market was shut.

Four: local clearing

The payment enters the destination country's own transfer system. Every one of these has cut-off times, and some have only a handful of settlement windows per day.

Miss a window by ten minutes and the payment waits for the next one. This is why an honest arrival estimate has to be corridor specific. A provider quoting one blanket delivery time across every destination is guessing.

Where to push

Of these four stages, only screening and liquidity are within a provider's control. Validation quality is a choice they make, and local clearing windows are fixed by the destination country.

So when you evaluate a provider, ask what proportion of payments get held in screening, and whether they hold liquidity in your corridors or buy it on demand. Those two answers predict your experience better than any headline delivery time.

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