Welcome to issue 110 of Payments:Unpacked, get to grips with the UK’s retail payments landscape with Mike Chambers - exclusive payment insights, hot topic briefings and fundamentals unpacked.
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One small website button - one giant leap for payments to government
Great to see The Times covering Ecospend’s pay-by-bank solution going live on the HMRC website, the first government department to adopt Open Banking payments.
Paying your tax bill just got a whole lot easier. The 11 million people who fill out self-assessment forms online will no longer have to find credit card details, passwords or unique tax references when paying the taxman.
Instead you will be given the option to pay by bank and then transferred to your online banking account or mobile banking app, where you log in as normal. The details of your payment will automatically be filled in, including your unique tax reference number and the amount you are paying. The whole thing should take less than a minute.
On the 24th March at about 7:03am the HM Revenue & Customs launched a little button on their website for Self Assessment. It is called "Pay by Bank account". It’s actually Open Banking assisted by Ecospend.
This is the first embedding of Open Banking within a government in the world. The first tax authority to launch Open Banking and reap the benefits. No hybrids here, this is the first - UK government lead the way in Government Open Banking adoption.
APP fraud continues to rise as criminals target bank customers online
The amount of money lost to victims of authorised push payments fraud in the UK rose to £479 million in 2020, as criminals used the Covid-19 pandemic to target people online.
The APP fraud losses documented by UK Finance are up five per cent on the previous year, with the number of cases increasing by 22% to almost 150,000 in 2020.
Banks were able to return £206.9 million of the losses from APP fraud to victims, over three quarters more than the sum returned in 2019.
Impersonation scam cases, in which criminals impersonate trusted organisations to trick victims into handing over their money, almost doubled to 39,364 cases in 2020, the largest increase of all scam types.
On the upside, contactless card fraud losses fell by 22% to £16 million, the first annual fall since this data started being collected in 2013. This is likely to be related to lockdown restrictions limiting opportunities for criminals to commit contactless fraud using lost and stolen cards.
More via Finextra: APP fraud continues to rise as criminals target bank customers online.
Five ways for a Fintech to make money
Tanya Thourani has been thinking about how Fintech’s make money and has come up with five models:
Nice & Simple : Subscriptions or Service Fees.
Make it count : Brokerage Fees.
Most Lucrative : Third Parties.
Oldest Buddy : Advertising.
The Gold Mines : Data & APIs.
Read Tanya’s blog: Five ways for a Fintech to make money.
Question: Which UK bank was:
the first bank designed with computerised operations in mind;
the first bank in Europe to adopt OCR (optical character recognition) technology;
the first bank to offer interest-bearing current accounts,
the first bank in Europe to offer telephone banking, operating several years prior to the start of Midland Bank's First Direct service?
Answer (according to David Hensley): National Giro (also known as: National Girobank, Giro Bank, Alliance & Leicester, and now Santander).
Current Account Switch Service (CASS): Progress despite headwinds
CASS plays a vital role in helping consumers and businesses make the most of their money by providing a simple and stress-free way to move their current account. In these unprecedented times, the smooth working of the service is more important than ever.
Pay.UK have published the Current Account Switch Service Annual Report - three key take aways:
All regulatory KPIs met in 2020, including high satisfaction, completion times and awareness. Despite the pandemic, CASS achieved its overall 75% awareness target for 2020.
Over 700,000 switches took place through the service in 2020, taking the total number of switches to above 7 million since the launch of the service in 2013.
CASS’ strategic approach aims to have a long-term impact on the way banking services are delivered and consumers’ future needs are met.
Pay.UK report the following breakdown of their regulatory KPI’s:
99.5% of switches were completed within 7 working days.
Consumer satisfaction ratings averaged 92% across the year.
CASS exceeded its overall 75% awareness target for 2020, maintaining a positive engagement rate, with 79% of consumers saying they are aware of the service.
The total number of current accounts switched through the service in 2020 was 704,560 including 652,369 personal and 52,191 business current account switches.
More: CASS Annual Report.
Stateside Faster Payments
The Clearing House and Credit Suisse have published a helpful summary of Faster Payments in the USA:
Source: TCH, Credit Suisse research
Each day at 11am I publish a payments fact on Twitter and Linked In.
Bank Holiday Monday’s payment fact suggested that the fist mention of a ‘credit card’ was in Edward Bellamy’s book ‘Looking Backward’ published in 1887.
This caused Dave Birch to recall one of his first event blog posts ‘1886 and all that’:
I’m very interested in the history of the card business, because I can’t help but feel that an understanding of how it got to where it is should provide some insight into where it is going next, so I am always on the lookout for old references to non-cash retail payments. In particular, I’m always curious about the first reference to the credit card in literature. The oldest I’ve found so far is in a long-forgotten text from 1886 called “Looking Backward, 2000-1887” by one Edward Bellamy. I picked up a 1947 edition from the Amazon marketplace, which suggests it must have been reprinted a few times. Indeed, the dust jacket claims it to be one of the best selling utopian fantasies of all time.
Grab a coffee and read a 2006 blog by Dave Birch: 1886 and all that.
Videos to watch
An anti-acronym tirade from Jack Wilson at True Layer.
Northey Point: The stage is set for digital payments - are we ready?
Nationwide Building Society says 2700 customers have signed up to a six-months' free energy switching service on its Web site, with a third opting for green tariffs.
Wise, in tandem with Starling Bank and other leading fintechs, have launched an initiative to tackle IBAN discrimination in Europe.
The Payments:Unpacked newsletter from Mike Chambers at Northey Point explores a wide range of the UK’s payment news including: Open Banking, Request to Pay, Direct Debit, Confirmation of Payee, Bacs, CHAPS, Faster Payments, LINK, cash, cards, cheques and Central Bank Digital Currencies (CBDCs) and unpacks the eco-system that supports the operation of these systemically important payment systems.
The newsletter is an independent and informed insight into the UK’s payments landscape – exclusive payment insights, hot topic briefings and fundamentals unpacked.