Everyday Money Management

Issue 196 | 1 November 2021

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This week’s Payments:Unpacked is brought to you by Answer Pay and The Money Carer Foundation who have teamed up to launch Request to Pay functionality to help support for older and vulnerable people across the UK.

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Request to Pay partnership supports appointeeship and deputyship services

Fintech company Answer Pay and The Money Carer Foundation have teamed up to launch Request to Pay functionality to help support for older and vulnerable people across the UK.

Answer Pay connects payment services providers to Request to Pay services through a simple integration. Answer Pay is the first certified provider of Request to Pay technology and performed the first live transactions in the UK.

The Money Carer Foundation is a social enterprise that provides a trusted appointeeship service for thousands of vulnerable adults across the UK who cannot manage their own financial affairs. It is completely independent and assists people with challenges in society by managing their day-to-day finances and working alongside the people who support them, such as carers, social workers and other solicitors.

As a nation, we have a growing population of ageing and vulnerable adults. The utility and telecom companies are a vital lifeline for people and their families, carers and advocates often face long waits simply trying to communicate with and busy call centres, in order to enable that these essential services remain in place.

As an organisation, we grapple with these issues on a daily basis, and our new partnership with Answer Pay will give families, solicitors and local authorities another level of support to manage their finances. Request to Pay will help us administer our customers’ financial affairs more efficiently and provide an invaluable service for anyone who is in a similar situation. We are working with Answer Pay to help Ofgem and Ofcom understand and support the implementation this technology with their members. The ability for us to communicate electronically with billing companies is a game changer.

Sean Tyrer, CEO of The Money Carer Foundation

Using The Money Carer Foundation’s proprietary money management software, Monika, custodians are authenticated to ensure the relevant legal permissions and authorities to act. It then provides them with a unique money management account where they can then select which of the vulnerable persons bills they wish to receive and manage from the account.

The process of notifying the donor’s suppliers, receiving and then paying those bills will be made simpler thanks to the Request to Pay technology provided by Answer Pay. Billers can significantly reduce their costs as they are able to send digital requests for payment directly to the relevant account within Monika. The custodian can then easily make payments on behalf of the donor.

Request to Pay is about helping billers and payers communicate digitally. Bill payers are empowered to pay how they want, and billers can keep costs down. It’s a mutually beneficial approach that will transform how we manage our finances. Its ability to help vulnerable people and their families or professional money managers is clear.

Peter Cornforth, commercial director of Answer Pay

Request to Pay is the UK’s bill payment standard, reducing cost and improving cash flow for businesses whilst empowering consumers. Complimentary to existing payment methods, payment service providers and banks are adopting Request to Pay to differentiate their services and increase payment volumes.


UK Payments in numbers

In the last few says Premium Payments:Unpacked subscribers received our monthly focus on the volume and value of payments processed in the UK.

Here’s a snapshot for Faster Payments:

Faster Payments

In the 12 months to the end of September 2021 we see that:

  • Single Immediate Payment volumes have increased by 24% (12 months to August 26%)

  • Total Faster Payment volumes have increased by 21% (12 months to August 22%)

  • Single Immediate Payment values have increased by 27% (12 months to August 27%)

  • Total Faster Payment values have increased by 24% (12 months to August 25%)

The trend has continued in September with both volumes and values significantly ahead of 2020 levels. September 2021 saw an increase of 9% in the volume of Single Immediate Payments processed in the month compared to 2020 and 17% in the value of Single Immediate Payments.

The increased use of faster payments seems to be a digital payment habit that will be here to stay, reinforced throughout each lockdown over the last 12 months but also continuing as restrictions have eased. The resilience of this particular payment habit coupled with likely increased activity in 2021 suggests that further year on year growth would be expected over the remainder of the year – albeit the trajectory of growth now appears to be flattening.

The full UK payments in numbers report covers: Bacs Direct Debit and Direct Credit, CHAPS, Faster Payments, Cheques, LINK’s ATM withdrawals, debit and credit cards and Current Account Switching Service.

The full UK Payments in numbers is available to premium subscribers:

Goodbye MT and hello MX

Santosh Rajagopalan at Payments Domain has shared some insights into SWIFT and provides us with a MT masterclass ahead of MX transformation.

The year was 1973, the world was changing rapidly. The United Kingdom, Denmark, and Ireland entered the European Economic Community, The first American prisoners of war were released from Vietnam, The Exorcist premiered for the first time and the world of payments changed forever and for the better. Banks back then had a big problem when trying to make international payments “Communication!!”

Banks used a technology called TELEX (Telegraphic Exchange) which was a major method of transmitting written messages between businesses. It was basically a network of teleprinters that used telegraph-based connections. Think of TELEX like a texting service that we use today so commonly but using large machines. This was even before FAX became popular. TELEX was basically the latest version of the telegram that has been in use since the 19th century.

TELEX had several downsides. It was slow, there was no security and the worst part was that the receiver was not able to understand the instruction (aka payment messages). A lot of details got lost in translation. There was no universal standard for communication between banks. There were language barriers, time zone differences, human errors which all led to one thing – Change.

This change came in the form of a co-operative that decided to formulate and structure how financial information was shared between banks which would result in a revolution in the cross-border payments space that stood the test of time. In 1973, 239 banks from 15 countries joined hands to bring an end to this communication conundrum by forming SWIFT.

Santosh’s blog covers:

  • SWIFT MTs from a Payments Perspective

  • Category 1 aka. MT1 Series

  • Category 2 aka. MT2 Series

  • Category 9 aka. MT9 Series

  • 103, 202 and 104: What do they mean?

  • SWIFT message blocks

Santsoh’s Masterclass helps us understand the original idea for SWIFT and is his way of saying goodbye to MT messages as part of the MX transformation.

My first experiences of payments in correspondent banking were at the very end of the TELEX (one of my jobs was to interpret a free format TELEX message with a red pen and a ruler to ‘mark up’ the message into a payment instruction that a typist could enter into the ‘system’ ready for a first, second checker and a ‘releaser’ to send the payment to the beneficiary. Hardly STP (Straight Through Processing)!

In my interview to become a ‘funder’ I was asked what SWIFT stood for - getting the ‘T’ right got me the job. I was then introduced to the world of MT101’s, MT210’s MT940/950’s, SHA / BEN / COR charging options and, worst of all, a free format MT999.

More: SWIFT masterclass - Goodbye MT and hello MX.

Pay at Pump: Starling Bank answer your questions

Starling Bank writes: Pay at Pump is a system that allows customers to pay for their fuel at the pump itself, so they don’t have to go to the kiosk or into the shop to settle up.

Until recently, if you used Pay at Pump, a small amount of money would be temporarily reserved on your card. This was the case for most cards and most banks. But a new system has now been introduced, by MasterCard, Visa and American Express.

The new authorisation amount is up to £100 on your card and this will apply to everyone, including Starling customers. In fact, the amount held may often be £99 - see later on for more on that. The idea is to ensure you have sufficient funds to afford the fuel.

The new authorisation limits may take some time to roll out to all petrol stations.

More: Pay at Pump: Your questions answered.

Why are people so divided about the £100 contactless limit?

In a “Dear Luc” article Luc Gueriane, CCO at Moorwand has been addressing concerns about the recent increase in the UK’s contactless limit.

Contactless card payments have boomed since the onset of Covid-19 and 15 October marks yet another milestone with shoppers able to spend £100 per transaction with a tap of their card.

At first, an initial increase from £30 to £45 in April 2020 was deemed essential when the Covid-19 pandemic first started and avoiding contact, especially the use of cash, was paramount. Now that two-thirds of transactions in the UK are contactless, and both consumers and merchants have become more comfortable with higher limits, the maximum spend is being increased.

However, the latest increase has been met with concern and confusion.

The Dear Luc article covers:

  • The fraud conversation

  • What already exists

  • Responsible banking

  • The opportunities

  • The future of contactless

The increase is a positive change for the industry and wider economy. High streets are looking very different to how they once were and so providing faster and more convenient payment options will be a welcome boost to many struggling industries.

Not only will consumers benefit from this ease of use but legacy banks and fintechs can create unique services to change and support the way customers shop and ultimately manage their finances.

Read Luc’s blog here: Why are people so divided about the £100 contactless limit?

Current Account Switching on the rise

The steady state of Current Account Switches was disrupted by the emergence of the COVID pandemic in the first half of 2020. Although the number of switches began to rise during the Autumn, the December switching level had fallen to 41,357 (a mix of seasonal and lockdown factors being the probable cause).

While current account switches dipped again in January (31,854) and February (42,398) as Lockdown 3.0 took hold, there was a significant increase in March (63,724) as the roadmap for the COVID-19 recovery became clearer. This recovery has continued as restrictions have continued to ease. During Q2 2021 182,745 current account switches were completed, 44,769 more than in the previous quarter. The number of switches rose by a further 29855 in Q3 2021 with 212,600 switches taking place between July and September.

Pay.UK publish the winners and losers information in alphabetical order by brand but sorting based on net gains / losses by banking group usually provides a different picture. However for Q2 the top three by group are unchanged – i.e.

  1. Lloyds Banking Group: +23505

  2. Starling Bank: +13720

  3. Virgin Money: +6915

At the other end of the table the picture is slightly changed by group:

19. Natwest: -13639
20. HSBC: -16564

The full quarterly report on the UK’s Current Account Switching Service is available to premium subscribers:

Chase’s UK current account now available directly via app stores

UK consumers can now open a current account with JPMorgan Chase’s new digital bank in minutes and without needing a code.

Chase officially launched its UK digital bank in September, offering a fee-free current account that combines money management features with cashback rewards.

Chase has been taking a controlled approach to onboarding people, initially inviting users to sign up online. New customers can now download the app straight to their phones and sign up in a few minutes.

Chase intends to eventually expand into personal lending, investment, and even mortgages in a bid to "upend the UK banking market".

More: Chase features.


In brief:

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