Breaking Free: The Case for Flexible Payment File Formats in Banking

Jim Foster
Breaking Free: The Case for Flexible Payment File Formats in Banking

Adaptability is the currency of progress in financial services.

Financial institutions that effectively navigate ever-evolving technologies, new competitive threats, changing customer expectations, and economic shifts will be best positioned to grow and thrive.

However, many financial institutions are unwittingly putting themselves at a competitive disadvantage by partnering with Fintechs that force business customers to submit payment files in a particular format.

This article reveals the downside of rigid payment file formats. It shows how embracing flexibility can help financial institutions usher in an era of innovation, efficiency, and customer-centricity.


The struggle for standardization

On the surface, standardizing the format for business customers to submit their payment file would seem to be a good way for financial institutions to streamline their operations and simplify processes.

But there are downsides to mandating a specific format for the payment files that businesses submit.

  • Customization.  Collectively, businesses use hundreds of different enterprise resource planning (ERP) applications and accounting software packages, each with its own preferred file format.  Making matters worse, different industries may have different data requirements and processing needs.  Mandating a specific file format may force a business to modify its systems or create a custom file format to comply with the financial institution’s requirements.  Modifying systems and creating customized files can be complex and costly for businesses.
  • Customer dissatisfaction. Enforcing a file format that is incompatible with a company’s systems can strain an otherwise strong customer relationship.  Managing expectations and enforcing adherence can be especially tricky with new clients.  Customers may become so frustrated that they seek alternatives that better align with their operational preferences.
  • Competitive disadvantage. Rigid file formats increase the possibility of a bank losing clients to competitors that offer more flexibility in terms of the file formats that they accept.
  • Lack of innovation. Inflexible requirements for payment file processing may discourage the adoption of new technologies and emerging standards among banks and their clients.
  • Customer support issues. Financial institutions with rigid payment file formats must be prepared to help customers overcome difficulties in adapting to the mandated file format.


Flexible payment file ingestion

Financial institutions have too much riding on their relationships with business clients to jeopardize them with disruption and other issues related to inflexible requirements for payment file processing.

That’s why more financial institutions are partnering with Fintechs such as Edenred Pay that use Application Programming Interfaces (APIs) and file adapters to facilitate the ingestion of payment files from business customers.  Here’s how they work:

  • APIs.  APIs use the standard protocols and data formats offered by ERP vendors and other technology providers to make it easier for financial institutions to integrate with their clients’ business applications.  APIs enable real-time communications between the systems used by a financial institution and its business clients.  As a result, payment data can be seamlessly transferred between the systems, reducing manual intervention and the possibility of errors.
  • File adapters. File adapters help normalize the many payment file formats generated by the various ERP and accounting software packages used by business clients.  File adapters act as an intermediary between a financial institution and its business clients, transforming payment files from one format into another, to ensure the smooth exchange of payments data.  Some file adapters even include mechanisms for detecting and managing errors in payment files.

By leveraging the APIs and file adapters offered by leading Fintechs, financial institutions can offer their business customers flexible options for submitting payment files for processing.


Benefits of flexible payment ingestion

Offering flexible ways to ingest payment files is crucial for financial institutions.

  • Customer satisfaction. Flexible file ingestion methods enable banks to accommodate different file types, making it easier and more convenient for businesses to submit payment files in their preferred format, and without the need to modify their existing systems.  Flexible file ingestion demonstrates a financial institution’s commitment to understanding and meeting the unique requirements of each business client.  And flexible ingestion methods enable financial institutions to support the increased payment volume and complexity of fast-growing business clients, who may migrate to more sophisticated ERP systems over time.
  • Competitive advantage. Financial institutions that can more easily accommodate the needs of business clients are better positioned to attract and retain business in a competitive market.  Flexible file ingestion also makes it easier to adapt to new tech and changing market trends.
  • Improved back-office efficiency. Flexible payment file ingestion methods reduce the amount of manual intervention required for a financial institution to process payment files.  Eliminating friction in the processing of payment files also speeds up the overall process, which will become increasingly critical as more businesses adopt real-time payments.
  • Better data accuracy. Flexible file ingestion streamlines the capture and validation of payment data from businesses, reducing the possibility of errors in processing payment files.


Stand out from the competition

The downsides of mandating a singular payment file format far outweigh the benefits of standardization.  By partnering with a Fintech that offers APIs and file adapters, financial institutions can offer business clients more flexible ways to submit payment files and enhance customer satisfaction, gain a tremendous competitive advantage, improve back-office efficiency, and increase data accuracy.



Edenred Pay, an Edenred Company, is the global leader in invoice-to-pay automation. Our integrated platform connects businesses with suppliers, ERPs, banks, FinTechs, and payment rails to automate, optimize, and monetize the entire B2B payments lifecycle – from invoice receipt through payment reconciliation. Edenred Pay’s efficient, integrated solutions create a frictionless process and help deliver value to the enterprise by enhancing visibility and monetizing AP.

Visit or contact us to learn more.