Welcome to the new Payments:Unpacked subscribers who have joined us over the last week - we are sure that you’ll enjoy reading the free weekly newsletter.
It’s always encouraging to receive feedback - special thanks to Dave Birch for endorsing Payments:Unpacked:
Mike's career at the heart of the UK's payments infrastructure and his wide perspective on the evolution of the space are invaluable to those of us developing strategies in the field.
Dave Birch, In the future, everyone will be famous for 15Mb
Earn rewards
A significant number of our new subscribers are a direct result of readers recommending Payments:Unpacked to friends, colleagues and social media networks.
Now you can earn rewards with our newly launched referral programme - get your unique referral URL here:
Instant is getting mandated, will you be ready to embrace it?
Form3 have been reading the text of the proposal of the EU to mandate instant payments, and the commentaries on social media. From3 ask whether you feel ready to embrace this change?
The decision to move from a sole focus on reachability to mandating instant payments for all PSPs has been a long time coming and eagerly awaited by some parts of the industry like the players in open banking.
This important piece of regulation will really make instant payments the new normal for everyone, and go a long way to fulfil the purpose the EU had in mind with instant payments in the first place.
Understanding how the process of EU legislation can work, ratifying this text will take time, and there will most likely be amendments to follow.
However, here is what Form3 suggest is going to be needed for the scheme to succeed:
Trust in the system is key. It’s important to not do the bare minimum fraud prevention and sanctions but adopt best practice this is what will make a difference in the service of your customers.
Real adoption is the support of both in and outgoing payments. And though the timelines for the supporting of this are split, if you want your piece in the market it is better to support both flows sooner rather than later.
Pricing is to come down to either the same or lower than SCT, with a SEPA market with so much difference in pricing it is worth considering whether ‘free of charge’ is not just the way to go. The real value is in your customer relationship in the end.
More:
Form3: Instant is getting mandated, will you be ready to embrace it?
Commission proposes to accelerate the rollout of instant payments in euro.
Here’s what our friends over at SurePay have to say on the subject:
A great day for the IBAN-Name Check (CoP). In 2016, we introduced the IBAN-Name Check in the Netherlands and in 2019, CoP was introduced in the UK. Yesterday, the European Commission announced that the IBAN-Name Check solution will be adopted Europe-wide, as part of the Instant Payments legislation!
This ensures that instant payments in euro are affordable, secure, and processed without hindrance across the EU. One of the requirements is the IBAN-Name Check: an obligation on Payment Service Providers to verify the match between the IBAN and the name of the beneficiary, including bulk payments.
The solution protects banks and their customers against fraud and misdirected payments and thus marks an important step for the European payments system. Results show a mitigation 81% of related payment fraud and 67% drop in misdirected payments, directly with introduction.
Today, 170 Million accounts can be checked in the frontrunner countries already via one API. And each week we implement front runner banks to connect to this initiative.
With our experience from checking payments in the Netherlands, UK, France, Italy and Swift, SurePay is looking forward to helping and supporting European countries and banks implementing the IBAN-Name Checks solution.
More: Helping and supporting European countries and banks implementing the IBAN-Name Checks solution.
Understanding Real-Time Payments
ACI Worldwide have produced a helpful guide to understanding real-time payments.
Here is how ACI describe a real-time payment:
The term “real-time payment” (RTP) is used to describe any account-to-account fund transfer that allows for the immediate availability of funds to the beneficiary of the transaction. Real-time payments offer a confirmation of funds via a real-time balance; once a payment is authorized, the payer’s account reflects the deduction of funds instantaneously. Though settlement timing may differ from one scheme to the next, it is often completed in a matter of seconds. For these reasons, real-time payments are also commonly referred to as immediate payments or instant payments.
All real-time payments are irrevocable, meaning once a payment is made, the payer cannot deauthorize the transfer. Though early RTP systems were subject to nightly, weekend and holiday restrictions, modern iterations make payments available 24 hours a day, 365 days a year.
The guide also considers:
How do real-time payments work?
Where are real-time payments used?
What are the benefits of using real-time payments?
What is driving real-time payments’ growth?
What are some potential use cases for real-time payments?
What is the difference between real-time payments and faster payments?
How can I implement real-time payments?
More: Understanding Real-Time Payments from ACI.
VRP and Beyond
Huw Davies of Ozone joined Helen Child on an Open Banking Excellence webinar exploring VRP’s - here’s what Huw, Helen and their invited guests had to say:
APP scams to double by 2026
Authorised Push Payment (APP) fraud losses are on the rise and expected to climb to $5.25 billion across the U.S., U.K. and India by 2026 (a record CAGR of 21%) according to Scamscope, a new report by global payments software company ACI Worldwide and GlobalData.
Scamscope also sheds a light on the types of APP fraud, with product (37.8%), romance (18.4%) and investment scams (16.3%) being the most common across all three geographic markets.
The report outlines four key recommendations for financial institutions to tackle the issue:
Banks must get ahead of incoming regulatory changes and strengthen and optimize both processes and technologies in the fight against APP scams.
Robust technology solutions are needed for the collection of more and better customer data – behavioral data is key to tackling social engineering.
Better collaboration: banks at the initiating and receiving ends of transactions must collaborate more closely to better understand where money is being sent and why. That means creating a network of intelligence based on the sharing of fraud signals in metadata format, and in real time.
Banks must get serious about disrupting mule account networks. That means monitoring money coming into as well as out of customers’ accounts and analysing the behaviour of those accounts.
More: APP scams to double by 2026.
Strengthening the security of digital banking
Having considered the UK fraud challenge it is helpful to see what is happening in other countries - here is what action the Monetary Authority of Singapore has decided.
The Monetary Authority of Singapore (MAS) and the Association of Banks in Singapore (ABS) announced the following additional measures to further safeguard customers from digital banking scams:
Require additional customer confirmations to process significant changes to customer accounts and other high-risk transactions identified through fraud surveillance
Set the default transaction limit for online funds transfers to S$5,000 or lower;
Provide an emergency self-service “kill switch” for customers to suspend their accounts quickly if they suspect their bank accounts have been compromised;
Facilitate rapid account freezing and fund recovery operations by co-locating bank staff at the SPF Anti-Scam Centre; and
enhance fraud surveillance systems to take into account a broader range of scam scenarios.
More: Strengthening the security of digital banking.
NatWest releases payment APIs for corporate customers
NatWest has released three new APIs to support corporate, commercial, and institutional customer demand for real time payments and automated reconciliation, including Bacs payments.
The launch adds to the Indirect Access Payments suite of APIs which are widely used by Natwest Agency Banks and Indirect Payment Service Providers to process secure bank-grade and non-bank grade domestic payments, worth billions in value.
For commercial and corporate treasury teams, the new APIs are housed in NatWest's host-to-host package Bankline Direct, which integrates with corporate Treasury Management Systems (TMS) or Enterprise Resource Systems (ERP) and is used for payments and reconciliation activities.
Supporting ISO20022 formats, the first two APIs enable users to initiate Chaps, Faster Payments and international transfer and receive near real time payment status notifications, as well as perform automated account reconciliation activities. The third API in the service suite is a new product - Autopay Direct Bacs API - aimed at large corporate customers to allow for Bacs payments to be submitted unattended and seamlessly.
Consumers and businesses see overdrafts as a barrier when switching
While people can switch their bank account if they use an overdraft, some people and businesses see it as a barrier to switching. Pay.UK have commissioned research from IFF to explore the barriers consumers and small and medium enterprises (SMEs) who used an overdraft, both perceived and experienced, when switching current account.
In their research Pay.UK found that the number of people and businesses using overdrafts regularly will likely increase in the future, as they are more likely to look for an overdraft over other forms of credit to address short-term cash flow issues – particularly as current macroeconomic conditions may make them more reliant on financial support.
The onus is on the Current Account Switch Service, consumer and business information sources, banks, and regulators to ensure overdraft use is not a barrier to switching, and to consider what solutions might make switching with overdrafts easier.
Lloyds trials personalised monthly limits on gambling spend
Lloyds Bank is trialling a feature which enables customers to set a limit on how much they can spend each month on gambling using their debit card.
Available within the Lloyds banking app, users will be able to set a monthly debit card gambling limit of any amount to the nearest whole pound, when spending online, in person or over the phone.
Research from the Gambling Commission shows that approximately one in three UK adults participate in gambling (excluding lotteries), and up to three percent of UK adults are estimated to be at some risk of harm due to their gambling, of which 0.3% is considered to be ‘problem’ gambling.
Research carried out by Lloyds Bank found that 50% of people would like banks to take further action to help prevent gambling harm, with monthly gambling limits being one of the most supported features amongst respondents.
The addition of setting monthly limits, which gives customers more control in budgeting how much they are spending on gambling, can be adjusted or removed at any time and will automatically roll on each month, until the limit is removed.
Philip Robinson, director, personal current accounts at Lloyds Bank says:
For several years, we’ve helped our customers ‘turn off’’ gambling spend. Our newest feature lets customers set a personalised gambling spend limit, helping them better manage their money and establish boundaries around certain spending behaviour.
ICYMI
Video: SEPA instant, partnerships and big topics for Answer Pay.
Briefing: Who are Pay.UK and what do they do?
Briefing: Analogue money in an increasingly digital society.
In brief
Royal Mint prepares for life after cash with plan to sell collectable coins abroad.
Retail Banking Order breaches: CMA takes action against banks.
FTX implosion shows need for crypto regulation - BofE's Jon Cunliffe.
Labour seeks to protect face-to-face banking by forcing Commons vote.
Visa brings face payments and animated digital cards to World Cup.
Salt Edge expands its Open Banking offering to the Saudi Arabia market.
And finally
(Unfortunately) it’s back: Don't Pay UK calls for December 1 bills strike after 'death sentence' Autumn Statement.
Help grow Payments:Unpacked’s audience
