Welcome to issue 95 (updated) 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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POS Open Banking payment powers tattoo removal
Trilo has powered a Point of Sale (POS) payment using Open Banking at Naama Studios, a tattoo removal studio. The customer simply has to scan a QR code in order to make a £170 payment. In return for using Trilo, the customer also had a 1% donation made to the UK-based charity, Forward Trust, on their behalf.
With this landmark payment, merchants across the UK can now offer their customers the chance to pay directly from their bank account by simply scanning a QR code.
It’s so significant and exciting to power a POS Open Banking payment with Trilo, something previously thought not possible! With this, we’re one step closer to helping every merchant and consumer leave cards and card fees behind, and even better-giving consumers a Boost whenever they shop. Bringing Trilo to life is amazing, and seeing customers and merchants use Trilo, leaving cards behind is incredible. In light of the recent movements by Mastercard to increase their transaction fees, the timing couldn’t be more important to help businesses big and small move to Trilo.
Hamish Blythe, Founder & CEO at Trilo
Request to Pay Webinar
Request to Pay is now available in the UK and is coming soon in Europe.
Join Consult Hyperion for their weekly webinar to discuss transaction technologies and the issues our industry is facing – this week’s webinar features Request to Pay.
With so many payment options in the market, what makes Request to Pay different and why should banks and PSPs be interested in it?
To help delve a bit deeper into his question Consult Hyperion be joined by James Stanley from Anglian Water and Iain Niblock from Money Dashboard both representing potential customers of the service.
Also joining the event will be Mike Chambers and Peter Cornforth from Answer Pay who enable bank and PSP adoption of this new technology.
This Thursday 11th February, 4 pm GMT, 11 amET.
Register: Tomorrow’s transactions:Request to Pay.
SEPA Request to Pay
An extract from John Bloxis’ blog on the Open Banking Europe website: Scheming about Open Banking Schemes provides a useful update on SEPA Request to Pay:
SEPA Request to Pay is a scheme created by the European Payments Council (EPC) to “allow a Payee (Creditor) to request the initiation of a payment from a Payer in a wide range of physical or online use cases”.
The scheme stresses the benefits of end-to-end reconciliation, historically a headache for corporates and merchants when using ACH payments. The EPC also stress interoperability, reachability and a standardised set of responses for a Request to Pay message “Accept Now, Accept Later, Pay Now, Pay Later”.
The work is well advanced. A rulebook has been created and written, and preparations are being made to launch the scheme as soon as the ‘RTP Trust and Security Framework’ is finished in June 2021.
There were two drivers around the creation of this scheme. The e-invoicing community saw the need to standardise the payment request, while the ECB and others were pushing hard for a mechanism to provide real-time information wrapper for European Instant Payments. There were also concerns about the proliferation of successful but national solutions like Payconiq in Belgium.
The result is something that looks like it should be a PSD2 Payment Initiation Service (PIS), but everybody involved is very clear it is NOT a payment, nor a payment initiation (both of which have regulatory connotations). It is, they say, simply a request for payment. Furthermore, the SEPA Request to Pay scheme is not itself a customer-facing scheme. It is an industry scheme on which other players can build customer-facing schemes.
This is a similar approach to the UK which also launched a Request to Pay scheme last year.
This is subtle stuff, but similar methods have been used very successfully with the various Online Banking electronic Payment (OBeP) schemes including iDEAL in the Netherlands, MyBank in Italy, EPS in Austria, and Giropay in Germany. Although the EPC would/could argue that as Request to Pay can be used in face-to-face situations or other non-real-time cases it has a wider application than the OBeP scheme which tends to be online only.
For those who enjoy terminology, SEPA RTP is not the same thing as the UK Request to Pay which went live in May 2020. EBA Clearing’s Request to Pay (R2P) platform is built to support SEPA RTP.
And finally, do not talk to Americans about RTP in this context as they will instead understand "Real-Time Payment".
Source: Scheming about Open Banking Schemes.
Reducing risks to the successful renewal of the UK’s interbank payment systems
The Payment Systems Regulator (PSR) has published a consultation setting out ways to reduce risks to the successful renewal of the UK’s interbank payment systems.
Whether receiving wages or benefits via Bacs, using a smart phone to send money to a friend via Faster Payments or paying bills through Direct Debit, interbank payments are essential to the smooth running of our day-to-day lives and the functioning of the UK’s economy.
The New Payment Architecture (NPA) is the payment industry’s proposed way of organising the clearing and settlement of most interbank payments (payments that are made from one bank account to another) in the future, including those that currently use Bacs and Faster Payments. Pay.UK, the operator of Bacs and Faster Payments, is responsible for managing the delivery of the NPA.
The NPA represents a significant opportunity to meet growing demand for digital payments, further improve resilience and support increased competition, to benefit people and businesses across the UK.
To make sure these improvements are delivered, the PSR wants to lower risks to the delivery of the NPA as well as make sure it operates in a way that benefits everyone who uses it.
There are unacceptably high risks that the current NPA programme will not provide value for money and could stifle competition which could, in turn, delay the development of products and services that benefit people and businesses.
To lower the risks to the delivery of the NPA, the regulator is seeking views on limiting the initial central infrastructure contract to only those services that are most important to its successful launch.
The PSR is also consulting on the best way to support competition and innovation when the NPA is operational, including the role of the PSR’s regulation of the NPA and the firm providing the systems and infrastructure.
Proposals include that Pay.UK acts as a single point of contact for payment firms, so that commercially sensitive information does not pass to the central infrastructure provider. The PSR is also proposing that the central infrastructure provider is operationally separate from parts of any wider business which could benefit from unfair competitive advantage in payment markets.
First Open Banking service to pay HMRC
untied, the UK’s personal tax app, today announced that one of its users made the first-ever open banking-enabled tax payment to HMRC. This landmark payment was powered by untied’s partner, Fractal Labs as part of the companies’ SMART (SMEs Manage Accounts Receivables and Tax) initiative, backed by the Banking Competition Remedies Capability and Innovation Fund.
Making an open banking payment to HMRC using untied’s service ensures that the payment reaches HMRC directly; quickly and securely. This method of payment reduces the risk of errors and fraud by removing the need to enter HMRC’s bank account number or sort code. untied’s users can now authenticate the tax-payment directly from their own mobile or via online banking through a seamless end-to-end process. The service is currently in private beta and will be rolled out in the coming months.
More: Paying HMRC with untied.
Transferwise suggest that that the old, traditional banks don’t fare so well when it comes to price. But customers now have far better alternatives — fintechs, challenger banks and digital providers — who are setting far better standards for international transfers.
Transferwise ask whether these new dogs up to old tricks when it comes to being transparent with their pricing?
After a trawl of Starling’s site Transferwise conclude that Starling Bank are pretty transparent when it comes to their pricing.
Here’s what they found:
Their exchange rate and fees for sending abroad are crystal clear
Starling's Euro account is free if you're topping up and cashing out in euros
Their “no fees overseas” claims is mostly true
Starling is setting a great standard for the rest of fintech. They are cheap and they stand by their word. They pass our transparency exam with flying colours (purple and turquoise). But as they add more offerings, they might need to take a second look at earlier “free” claims. And it’s ok to charge for some things — if the prices are easy for customers to find.
More: Starling x transparency.
Perceptions of consumer protections in payments.
Pay.UK have published summary findings from primary research exploring perceptions of consumer protections in payments.
The research explored a range of topics, including consumer understanding of payment behaviours; the role of protections; usage and attitude to Faster Payments; and perceptions and gaps in payment protections.
Whilst the issue of fraud and APP scams are critical in today’s world, fraud was out of scope for this particular research as the detriment that customers face from authorised push payment (APP) scams is well known, and work is already being undertaken across the industry to improve solutions in this space.
Pay.UK’s research highlights:
Consumers report a range of motivations for using these payment methods – convenience and ease stand out as key, and therefore these could encourage uptake if a new method were to have these characteristics.
Consumers are often unaware if and when they are using Faster Payments, and lines are more blurred with consumer-to-business payments. Protection is important but lack of it is currently not a barrier to more people using FPS.
A range of factors may increase the need for additional protection in future:
Promotion by financial providers, retailers or tech companies
Increasingly fragmented payment provider markets (particularly online)
Increasing use of the Faster Payments Service (FPS) for ‘higher risk’ purchases.
It is important to note that financially vulnerable and less confident consumers, who have different motivations and levels of confidence, are currently seen to be less well placed to take advantage of existing protections.
In addition to the research findings the paper highlights differences between consumer segments, their understanding of payment methods and protections and motivations for their choices.
The paper concludes with next steps, including policy work on the topic. Pay.UK have created a working group with UK Finance that has provided input and challenge into the process so far, and will continue into the next phase.
Second review of LINK’s Specific Direction
The Payment Systems Regulator (PSR) are conducting a second annual review of Specific Direction 8 (SD8), which is designed to make sure LINK does all it can to fulfil its public commitments to maintain the broad geographic spread of free-to-use ATMs.
The PSR would like to hear your views on how well SD8 is working in practice.
The PSR issued SD8 to LINK in October 2018 and said we would review it after 12 months and (if still in place) after 24 months. The PSR published the findings of the first review in March 2020 and are now conducting a second review.
As SD8 has now been in place for a little over two years, the PSR want to make sure that it is still working as well as it can. In this Call for Views, they invite you to submit your views on four areas:
How well LINK fulfilled requirements under SD8 for implementing policies, reporting publicly, maintaining coverage of Protected ATMs, and providing clear and transparent information.
How well the requirements under SD8 have worked in practice in relation to protecting free-to-use ATMs.
How well LINK’s requirements under SD8 (for example, Direct Commissioning and the Low-Volume Premium) have worked in maintaining broad geographic access.
Whether SD8 should remain in place, given some of the recent wider initiatives that have been introduced.
These initiatves include LINK’s ATM Community Request scheme and Retail Centre policy, the Community Access to Cash pilot scheme, provision of banking services at Post Office branches, as well as newer initiatives such as the potential introduction of cashback without purchase and shared-banking services like OneBanks.
Responses need to be submitted by email to PSRcashaccess@psr.org.uk by 26 February 2021.
16 million UK debit cards to convert to Mastercard.
After 15 years Cashplus becomes the newest ‘official’ challenger bank.
Grab a coffee and listen to David Birch speaking at the November 2020 Futurism Forum on the practical implementation of Central Bank Digital Currency.
15 Digital Payment Upgrades That Would Improve The Customer Experience.
Barclays rolls out digital receipts with Flux.
Forbes article by Dave Birch: Forget Contactless, We’re Going Contact-Free: Apple and the pandemic have converted is to QR codes.
According to LINK, the operator of the UK’s ATM scheme, 23,054,751 separate cards were used in LINK ATM Scheme ATMs during January. If you were to lay them out end to end they would be 1,200 miles long, that's Land's End to John o'Groats and almost half way back again.......
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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 and cheques 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.