How payment hubs work in the Netherlands

Organizations of many sizes reach a point where payment technologies become inevitable. As organizations grow, the volume of payments rises, more bank accounts need to be opened (more e-banking tokens and manual payments), ERP systems start playing a more prominent role, and you'll likely add new entities and users, only to name a few challenges. This results in highly complex and inefficient payment processes.

In recent decades, companies have increasingly embraced modern technologies to address complex business environments. Payment hubs have become more prevalent, particularly in markets like the Netherlands, to address the challenges growing companies face. In this article, we will examine how payment hubs typically operate in the Netherlands, drawing on insights from industry expert Huub Wevers.

How companies in the Netherlands commonly perceive payment hubs

Payment hubs are becoming increasingly popular in the Netherlands and are considered the norm for larger enterprises. Small and medium-sized enterprises (SMEs) are also becoming more aware of the benefits of payment hubs. However, due to the different nature of organizations, such as their industry or business models, payment hubs can differ significantly, leading to varying expectations from key stakeholders. Additionally, there are multiple payment technology providers, each with solutions that may vary slightly from one another.

As a result, we reached out to our expert, Huub Wevers, who has extensive experience in the banking and fintech industry for several decades, to offer additional insight into how companies view payment hubs. Huub regularly engages with various organizations, discussing their payment solution needs and challenges, which has made him an expert in understanding their typical requirements and how technology can effectively support them.

"We have observed a pattern where larger companies increasingly recognize the necessity of a payment hub solution. This is not only due to the burden of managing multiple bank tokens or ERP system connections, but also because of the growing threat of security breaches involving payments and finance team members. Incidents of scams, phishing, and hacking are at an all-time high. These challenges can only be addressed through secure and automated processes." - Huub Wevers, Head of Sales

Typical starting points for implementing hubs in the Netherlands

The situation Huub describes is a common one, and sometimes, it takes a scam or faulty payment for companies to realize that they need to improve their processes by adopting new technologies because their current processes are simply not scalable any longer.

Usually, finance becomes more complex as companies expand. Depending on the organizational structure, employees in finance, accounting, or treasury may start to notice inefficiencies in payment processes. For example, manual payments from different bank accounts and time-consuming manual three-way matching procedures (common in B2C companies) can be problematic. Additionally, ERP file formats may not align with what banks require.

And it doesn't stop there; payment control is hard to maintain centrally when your company has multiple subsidiaries with their own local bank accounts (often with different ERP systems). As the Netherlands is a major international trading hub, this is the reality for many companies based there.

These challenges are widespread among companies and have not gone unnoticed. Over the years, technology vendors have played a crucial role in addressing these challenges and have made significant developments. Huub, with a long history of working for banks such as ABN AMRO and NatWest Group, has firsthand experience of these technological advancements.

"While working at ABN AMRO, our team was developing delivery channels, for host-to-host bulk payment systems, that we were delivering to global companies. Since then, payment technologies have evolved to become business-critical systems for many companies." Huub Wevers. In his roles, Huub also partnered with B2B SaaS companies to roll out payment solutions to European companies.

How are payment hubs set up in the Netherlands?

The setup of typical payment hubs in the Netherlands can be likened to a spider positioned at the center of a complex web of systems, banks, entities, and users, efficiently overseeing everything.

Illustration showing the idea of a how a payment hub could be set up. 

In terms of system and bank integrations, hubs are commonly linked to ERP systems, accounting systems, payment service providers, banks, and third-party data providers that offer market data for making informed decisions.

• ERP system connectivity:

ERP systems gather essential information about supplier payments, which can be linked with payment hubs to automatically match payments with outstanding items. The most commonly used ERP systems in the Netherlands are SAP, Microsoft, Exact, AFAS, and Oracle.

• Bank connectivity:

Payment hubs are typically connected to all of the company's bank accounts either immediately from the start of implementation or gradually, depending on whether new connections need to be established or how local entities, banks, and regulations operate. These bank connections allow the hub to centrally process most payment types, regardless of whether it's a local entity in a specific country.

The most commonly used banks for corporates in the Netherlands are ING, Rabobank, and ABN AMRO. Internationally, the choice of banks varies depending on where organizations have their operations.

• Accounting system connectivity:

Accounting systems can contain useful information related to transactions. By automating payment processes with a payments hub, statements can automatically be sent to these systems for accounting purposes. Some common examples of accounting systems used in the Netherlands are QuickBooks, Microsoft Dynamics, Exact, Visma, and Oracle, among others.

• Third-party data connectivity:

Companies must have the most up-to-date insights into foreign exchange (FX) rates and interest rate changes, especially when dealing with market fluctuations in FX or interest payments. Payment hubs can often connect to market data providers such as Reuters, Bloomberg, or other relevant platforms and automatically apply the latest rates to reports.

• Payment service providers:

There is a growing demand for integrating payment hubs with payment service providers. This is because payment hubs can share statements with the providers to analyze the expected flow of money into different bank accounts from debit and credit cards, as well as other electronic payments.

This also provides an indication of the available cash for executing payments in the near future. Additionally, if clients require refunds, their payments can be more easily traced back centrally. Some of the biggest PSPs in the Netherlands include iDEAL, Direct debits, Klarna, Apple Pay, and Billink, for example.

Special payment hub requirements and trends in the Netherlands

"We've experienced a trend in the Netherlands where IT is becoming an increasingly important stakeholder in payment hub procurement because of the security aspect." says Huub. He mentions that IT is particularly interested in vulnerable processes, like payments, and how they can be made safer by adopting technologies that have payment security features. Typical requirements are process standardization, fraud prevention, sanctions screening, MFA, 4-eye principles, anomaly detection, payment file encryption, and a lot more.

What we can also see in the Netherlands is that companies frequently request to make various types of payments in addition to the usual accounts payable. For instance, some payment hubs, such as Nomentia's, allow for the inclusion of employee salary payments.

Moreover, cloud-based multitenant solutions are popular because they enable payment hub vendors to offer scalable options. When a new product feature is added for one customer, it can be seamlessly added to another customer's environment. This means that customers can benefit from each other's feature requests.

Frequently, companies aim to monitor user activity within payment systems due to the constant threat of hackers attempting to access various systems. Despite numerous security measures, users remain a weak point in cybersecurity. Therefore it's important to implement payment hub security features to mitigate risk as much as possible. Track user activity through audit trails also enable visibility into user payments, which can assist in identifying account takeover breaches when irregular activity occurs.

Main stakeholders involved in payment hub selection and implementation in the Netherlands

There are various stakeholders involved in the selection of a payment hub as well as the implementation of one. Even though this highly depends on the size and requirements of the company, the main stakeholders usually are:

- IT – IT teams are involved for various reasons, including security, compliance, and technical integrations between systems, as well as file format conversions when doing payments.

- Accounting – accountants often handle payments, such as accounts payable and interest payments. They ensure that the periodic bookkeeping includes the latest reports based on payment statements. Payment hubs provide significant benefits by automating these processes.

- Finance – finance teams are very often involved in tasks like invoice processing, three-way matching, AR & AP, and bookkeeping. Most of which affect payment processes. Therefore, they are often a key stakeholder in the process of buying and implementing payment hub solutions.

- Treasury – as the responsibilities of Treasury teams continue to grow, they often take on the task of improving payment processes. This is largely due to the fact that payment hubs can greatly streamline manual payment processes and have a significant impact on working capital and liquidity management strategies. Additionally, they can contribute to improving cash visibility. Since these tasks are typically handled by treasurers, they naturally become the main driver in selecting a payment hub.

- Controlling – a controller oversees financial operations within an organization. They manage financial reporting, budgets, and internal controls. They also analyze data, ensure compliance, and lead accounting teams. In that context, payments play an important role as they affect many of these areas. Hence, you can see controllers being involved in the selection of payment hubs.

- Banking partners – Before implementing a payment hub, it's important to involve all banks in discussions to explore how they can assist in connecting to the payment hub provider. These discussions may require some time, so it's advisable to plan in advance.

The implementation process of a hub in 6 steps

The implementation process of a payment hub can often be divided into six main steps. These are the primary steps to consider:

1. Ensure that banking partners are informed of the forthcoming changes and establish special contracts between banks and companies to facilitate the implementation of the payment hub. This process will involve negotiating and discussing the technical capabilities of banks and exploring connectivity possibilities.
   
   
2. The next step is for the payment vendor to link all banks and ERPs to the test environment.
   
   
3. Within the testing environment, you can initiate test runs by sending payment files to ensure that all fields between systems and banks are properly mapped and functioning.
   
   
4. Once tests are functioning, payment process rules and automation workflows can be set up to enhance security, controls, and efficiency.
   
   
5. Once the test environment is functioning properly, the changes can be implemented in the production environment. Afterward, small-scale tests can be conducted to ensure everything works as intended.
   
   
6. After setting up the systems properly, all users need to be administered, educated, and change management procedures need to be put in place to effectively adopt the new system and company-wide ways of working.

Primary benefits of payment hubs in the Netherlands

Payment hubs offer various benefits for companies. We have dedicated an entire article to why companies should use a payment hub, which you can find here. In summary, here are some of its main benefits:

• Central hub convenience:

• A payment hub isn't just about automation; it's a hub for both automated and manual payments, which can sometimes still be necessary.

• Beyond Accounts Payable (AP), it can even handle salary payments and other payment types seamlessly.
  
  

• Centralized control:

• Finance and treasury teams can benefit from centralized control and transaction execution.

• Overseeing payments across multiple countries and subsidiaries is effortless when everything can be analyzed in the same system.

• Payment hubs also enable visibility into cash balances of banks.

• Plus, robust security measures minimize fraud as much as possible.
  
  

• User management & compliance:

• Audit trails and payment history are there to support compliance with auditors, policies, and regulations.

• Multiple verifiers can be used for outgoing payments.

• In general, user management can easily be done centrally, and user rights can easily be distributed.
  
  

• Scalability & growth:

• As your company expands, so do your bank accounts and potentially ERP systems. Payment hubs scale gracefully, connecting new banks or ERPs quickly.
  
  

• Security first:

• Payment hubs offer peace of mind of the cloud (cloud-based).

• Single-sign-on (SSO) and multi-factor authentication (MFA) for payments keep data safe.

• Anomaly detection and fraud prevention measures can be implemented in the system to reduce fraud and errors in payments from a technical perspective.

Payment hubs are a must for larger and growing businesses

Payment hubs are becoming increasingly popular in the Netherlands and other countries, especially among larger enterprises. Even small and medium-sized enterprises (SMEs) are realizing their benefits. Time-consuming payment processes should be a thing of the past, as new payment hub technologies can address most payment-related challenges.

We understand that an article like this may only provide limited information about payment hubs. If you would like to learn more about some of the payment hub cases we have implemented in the Netherlands, please feel free to get in touch with us. You can reach us by filling out the form on our 'contact us' page.