Payments industry and regulatory round up

Issue 184 | 15 October 2021

Welcome to issue 184 of Payments:Unpacked, this premium subscriber edition provides a fortnightly round-up of payment related developments at Pay.UK, the Payment Systems Regulator, the Bank of England, HM Treasury, the FCA and the Open Banking Implementation Entity.

Period covered: 5 to 15 October 2021.


SME’s and Payments

Small-and-medium enterprises (SMEs) make up more than 99% of the UK business population and are vital to the economy, however recent research by Pay.UK suggests that over a third experience cash-flow difficulties due to late payments.

Earlier this year, Pay.UK commissioned Revealing Reality, the insight and innovation research agency, to explore how SMEs interact with payments.

The first phase of this research included conversations with fintechs catering to SMEs and with SMEs belonging to diverse sectors. Early findings have revealed the following:

  • Fintechs experience a range of challenges when building payment products and solutions for SMEs

  • Card and cash payments remain key payment methods for most businesses, although both are not without their problems

  • The lack of data around interbank payments makes reconciliation difficult and time-consuming

  • Overlay services like Confirmation of Payee are acknowledged positively but are also noted as causing

  • Late payments continue to be an issue

  • Personal banking experiences and preferences are factors when choosing a business banking provider

  • SMEs deprioritise switching bank accounts

  • For some SMEs, the ethical values of banks trump the cost and functionality offered by the bank.

  • Several features offered by challenger banks such as ’money pots’, payment alerts and search functionality are highly valued by SMEs.

Pay.UK are currently conducting the second phase of the research. This includes in-depth conversations with a chosen sample of SMEs to further explore the payment ‘pain points’ highlighted in phase one, as well as their awareness of, and attitudes towards, new and emerging payment solutions.

Pay.UK plan to share the final findings from this research in Q4 2021.


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