Welcome to issue 37 of “Payments, Payments, Payments”. In this week’s newsletter we take a look at the commercial opportunity offered by Request to Pay, we celebrate one million checks a day for Confirmation of Payee, we take a look at the regulators consulting on the Contingent Reimbursement Model and access to cash, grab a offer code for free attendance at the EPA’s Pay360 event and, in this weeks longer read, we consider what the UK payments statistics tell us about the Covid-19 measures.
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Request to Pay: What is it and where’s the commercial opportunity?
Request to Pay, a new payment messaging service soon to be offered in the UK, could address payment friction. Instead of a paper bill, you’d be able to receive a payment request through an app on your phone, with the bill attached. You could decide to pay some or all of it there and then, clicking a few buttons to connect to your preferred payment method. At the utility company, they can see your payment come in and know immediately what bill it corresponds to.
There’s no doubt that Request to Pay is a significant opportunity to create a more convenient, more flexible way for consumers to make payments, and a more efficient way for businesses collect them. The key challenge is how that opportunity is harnessed through a competitive market.
Catherine Ferguson, Client Director at Manifesto Growth Architects has written a helpful and thought provoking article on the commercial opportunity presented by Request to Pay - Read: Request to Pay: What is it and where’s the commercial opportunity.
Confirmation of Payee
Confirmation of Payee is the UK’s new bank account name checking service that helps protect consumers and businesses from certain types of fraud and misdirected payments by letting them know if the account name they have entered matches the account name of the recipient.
Pay.UK have announced that the newly launched Confirmation of Payee service is handling more than one million checks a day.
Contingent Reimbursement Model
The Lending Standards Board is consulting on how well measures for protecting consumers and refunding the victims of scams are working and have published a consultation document: Review of the Contingent Reimbursement Model Code for Authorised Push Payment Scams.
The Contingent Reimbursement Model (CRM) Code was launched on 28 May 2019. The voluntary code sets out good industry practice for preventing and responding to APP scams. It also sets out the requisite level of care expected of customers to protect themselves from APP scams.
The consultation will form the basis for the LSB’s one year post-implementation review of the CRM Code.
The consultation sets out questions across four different areas: implementation, customer experience, prevention measures, and resolving claims.
FCA’s and PSR’s joint approach to Access to Cash
The Payments System Regulator (PSR) have stated that ‘for many people cash continues to be a vital way of making payments, despite the changes brought about by Covid 19. As High Streets prepare to re-open, more shops will rely on the availability of cash and the ability to access banking services such as deposit facilities to be able to operate.’
Access to cash is a shared priority between HM Treasury, the Bank of England, Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR). These bodies meet as the Joint Access to Cash Strategy (JACS) Group.
The PSR have published a statement provides an update on the approach being taken by the FCA and PSR – FCA and PSR: joint approach to Access to Cash.
As Northey Point commentates on the topic of access to cash, engages with the industry and supports the evolving regulatory approach we will base our engagement on the following eight base principles:
Consumers should be able to decide for themselves how they pay.
Consumers should be able to decide for themselves how they pay. For us, it is important to have a broad mix of options and that efficient methods for payment are available
Burkhard Balz, Bundesbank, Germany.
The issues of ‘access to cash’ and the ‘acceptability’ of cash must be considered in tandem.
To preserve cash for cash sake will ultimately only serve to leave people behind.
All stakeholders should focus ensuring that digital payment solutions are accessible, inclusive and equitable for all in society.
Given that 98% people in the UK have a debit card – we must support those who have a debit card but are reluctant or feel unable to use it and seek credible solutions for the 2% who have yet to acquire a debit card.
The viability and sustainability of the UK’s cash supply network needs to be addressed (perhaps through the development of a utility cash supply network).
Ensuring a better understanding of the end user impact and economics of the ‘pay to use’ ATM network.
Ensuring that branch and cash facility closure communications always include details of the Current Account Switch Service (CASS).
Collecting Irregular Payments
Direct Debit has been working for thousands of organisations, both large and small, for over 50 years and its usage continues to grow both in terms of the number of organisations that use it and the number of payments collected – in excess of 4.5 billion payments were collected in 2019.
Most organisations and payers recognise that Direct Debit is a very effective mechanism for collecting a series of payments that fall due over time, for example monthly mortgage payments, insurance premiums and council tax.
Direct Debit also works well for payments that fall due less regularly, such as quarterly bills and annual subscriptions but what about those infrequent or irregular amounts?
Find out more: Collecting Irregular Payments.
Emerging Payments Association: Pay360
As an ambassador for the Emerging Payments Association I would like to invite you to join me as my guest at their flagship conference PAY360, taking place virtually on the 4th & 5th August.
The invite is completely complimentary. All you need to do is register here using discount code AMB20: https://pay360conference.online-event.co/registration/emerging-payments-2
There are some very exciting sessions on the agenda, including:
A panel with NatWest, HSBC UK, RailsBank, Digital Strategy, Innovation & Transformation and GPS on “Mastering the post PSD2 landscape – Open Banking trends and opportunities around the globe.”
A fireside chat with the EPA’s very own Tony Craddock and SkyParlour’s Angela Yore titled “Behind the scenes (don’t mention the W-Word)” where they will be revealing what really happened behind closed doors with Wirecard and discussing the contents of the EPA’s Overcoming a Payments Lockdown white paper.
An industry case study: “In the post COVID 19 world everyone works remotely and shops / banks online. Is solving digital identity the next gold rush?” presented by Callsign, HSBC Retail Banking & Wealth Management, Snap Inc., Plaid and Bud.
You can view the complete agenda and list of speakers here: https://www.pay360conference.com/agenda-2020/
Don’t forget when registering to use my discount code AMB20 for your free pass: https://pay360conference.online-event.co/registration/emerging-payments-2
Lloyds Bank is to take a minority equity stake in cloud-native payments technology house Form3 as part of an overhaul of its legacy payments architecture.
Money management app Plum has raised $10 million in a funding round led by Japan’s Global Brain and the European Bank for Reconstruction and Development.
Mastercard is expanding its interst in virtual currencies, approving Wirex as the first native cryptocurrency platform to be granted principal membership, allowing it to directly issue payment cards.
Five tips for forming an effective Bank / Fintech partnership.
Longer Read: What do UK payments statistics tell us about Covid-19 measures?
Jonathan Williams, Principle Consultant and Director of Mk2 Consulting has published analysis of Payment Statistics for the UK from January to June 2020.
There has been a lot of discussion of the economic impact of the lockdown measures on consumers and businesses. Suggestions of significant impact to GDP have been shown in other data sets but one source of data has not been investigated in much detail: the inter-bank data from the main clearing and settlement systems.
Inter-bank payments in the UK are the life blood of UK commerce. These include supplier payments, salaries, bill payments including credit cards, house purchases and company acquisitions, card settlements to merchants, person-to-person transfers and mortgages and insurance.
In the first of a series of articles looking at these statistics I consider what is apparent from the set of interbank payments volumes which are published card-based and e-money transfer statistics are less available. Further articles will focus on specific clearing systems, such as Bacs and Faster Payments.
Jonathan Williams, Principle Consultant and Director of Mk2 Consulting
Finally, don’t forget to check out the Emerging Payments Association’s COVID10 Recovery Toolkit:
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