Pivoting towards Open Banking payments, one card to rule them all and don't get phased out

Issue 121 | 4 May 2021

Welcome to issue 121 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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The Future Payments Landscape: Pivoting Towards Open Banking Payments

The UK’s roughly 90 trillion-pound payments industry is on the cusp of a dramatic makeover. Even before Covid-19, payment providers were under pressure to retool their offerings to better serve an increasingly digitised customer base that demands greater flexibility and control over their money. And the pandemic has only served to accelerate this dynamic.

Meanwhile, after three years of focusing on the data requirements of Open Banking, the industry is now beginning to pivot towards Open Banking payments, unleashing a range of new possibilities, including Variable Recurring Payments (VRPs) and Sweeping.

With a new payments landscape on the horizon, Moneyhub spoke to two industry experts to help guide us through the prospective changes: Mike Chambers, Chairman of AnswerPay, who served for over a decade as Chief Executive Officer of the UK’s biggest retail payment system, Bacs Payment Schemes Limited, and Dan Scholey, Chief Operating Officer at Moneyhub, who facilitated the first-ever Open Banking payment by a member of the public shortly after the regulation came into force in 2018 and whose platform also powered the first-ever live Open Banking powered Point of Sale payment in 2020.

Read: Synthesis of Dan Scholey and Mike Chambers’ thoughts on the future of payments.

Cash and Covid - leaving no one behind

This week Northey Point featured a guest blog by Conor Sinnott. Conor is an intern at independent financial services consultancy Enryo.

Conor writes: Covid-19 has not only driven new changes in consumer habits but also accelerated trends that have been developing since before the turn of the century. This is no more obvious than in the use of cash and coins for the purchase of retail products. 

Read Conor’s blog: Cash and Covid - leaving no one behind.

Current Account Switching Service (CASS)

Reliability and Confidence remain high although switching levels fall back during Lockdown 3.0

As previously reported the steady state of Current Account Switches was disrupted by the emergence of the COVID pandemic in the first half of 2020. Although the number of switches began to rise during the Autumn, the December switching levels fell to 41,357 (a mix of seasonal and lockdown factors are the probable cause of this dip). While current account switches dipped in January (31,854) and February (42,398), there was a significant increase in March (63,724) as the roadmap for the COVID-19 recovery became clearer.

However, whilst this was true of personal current accounts in Q4, December 2020 had recorded the highest proportion of small business and charity switchers accounting for 12% of switchers (personal 88%). This increased further in January 2021 with the proportion being 14.9% and 85.1% respectively.

The top three reasons to switch (online banking, mobile banking and customer service) continue to point to current account providers having a strong digital offering although incentives will have played a part in Q4 2020.

The key service factors of the CASS service of the 7 day switch guarantee, consumer awareness, consumer confidence and account redirection have all performed highly during Q4. This is evidenced by the 93% of people who have used the service over the last three years being satisfied with the CASS service.

With 13% of current account holders actively considering switching and a further 14% thinking about switching the service performance and consumer satisfaction point to the CASS service will continue to play its part in stimulating a competitive current account market in the UK – which, after all, was the key driver for the development of the CASS service.

Blog: Current Account Switching Service - quarterly tracker.

Curve rolls out Autopilot features

I’ve arrived a little bit late at the Curve party but this week I have been exploring the ‘one card to rule them all’. Curve brings your cards into one smart card and an even smarter app and has just launched two new features that help customers take more control over their money management.

Anti-Embarrassment Mode

Curve’s Autopilot features include the wonderfully named Anti-Embarrassment Mode. Here customers can decide which debit or credit cards serve as a backup, just in case their default card declines a transaction at the point of sale. At the queue at the local pub buying a round of drinks, getting a haircut, or shopping at a physical store after months of absence, customers can preserve their dignity with Curve automatically switching cards at the point of sale, if their default card doesn’t have enough funds.

Curve Cash Auto Spend

Using the Autopilot feature Curve Cash Auto Spend, customers can change their settings and automatically spend the cashback they already earn with Curve. Curve will take money straight from a Curve Cash balance when there are enough funds to cover the transaction.

Payment rules for recurring payments and Direct Debit (coming soon)

Curve is currently trialling a highly-anticipated Autopilot feature that will allow customers to designate a specific bank card to a recurring payment or direct debit, and also select a payment rule according to an individual merchant. From monthly household bills like Netflix, to the weekly food shop at Tesco, consumers can take control of their spending, without the need to think ahead.  

Having got to grips with the free version I guess I need to upgrade to Curve Black or Curve metal to explore how far Curve can go in helping me take more control over my Money - more to follow soon.

More: Curve - one card to rule them all.

Fraud and Confirmation of Payee

This week Northey Point featured a guest blog by Bob Ford, Payments Business Analyst and SME.

Bob writes: The Pay.UK service of Confirmation of Payee (CoP) has been established for just over a year but the life under lockdown under Covid has not abated the attempts by fraudsters to endeavour to try and scam our accounts of our money.

A friend asked for my thoughts on fraud reduction on the back of the recent request from the Payment Systems Regulator which got me thinking about the whole CoP lifecycle works and how it could be enhanced to assist in fraud reduction as well as allow the Paying Bank to provide a better service to their customer such that the paying customer can make a more reasoned decision about effecting the payment.

Read Bob’s blog: Fraud and Confirmation of Payee.

Over half of Building Societies see Open Banking as an opportunity

Over half (55%) of CEOs at Building Societies view Open Banking as an opportunity according to a new report published by Whitecap Consulting, in partnership with the Building Societies Association (BSA).

However, this technology is relatively new and unexplored by the sector with just over a third saying that they have not yet assessed Open Banking’s benefits for their business. Only a further 10% view it as a potential threat.

  • But 35% have not assessed Open Banking yet

  • Digital transformation is viewed as the key challenge for the sector

  • Moneyhub warns that Building Societies could miss out on opportunities by not embracing Open Banking.

More: Open Banking as an opportunity.

World’s most cashless place takes next step toward digital money

The central bank of Norway, where old-fashioned cash is now used less than anywhere else in the world, says it’s time to take the next step in exploring the introduction of a digital currency.

A few key points explain the accelerating interest (in central bank digital currencies). The Covid-19 crisis has propelled a drop in cash demand as more people shop online. Also, private digital money such as Facebook’s Diem is spurring policy makers to explore options of their own and finally - as large economies such as the U.S. and the euro area look into the issue, others are more likely to follow.

Johanna Jeansson, economist for the Nordic region

More from Bloomberg: World’s most cashless place takes next step toward digital money.

Webinar: Confirmation of Payee: Don’t get phased out.

In 2020, UK Finance members reported 149,946 incidents of APP scams, with losses hitting an all-time high of £479 million. Confirmation of Payee (CoP) was introduced in July 2020 as the industry response to Authorised Push Payment (APP) fraud and payment errors. 

With the early “Phase 1” onboarding due to close, it's important to understand what this means for your business, the implications for your incoming payments, the mitigation of APP fraud and your own brand in the market.

Join Bottomline's Ed Adshead-Grant and Clive Hodges on the 13 May at 11:30am for their webinar - Confirmation of Payee: Don’t get phased out.

Register: Confirmation of Payee: Don’t get phased out.

In brief

Longer Read: QR Codes - A Secret History

Jeff Banks of Blue Train Marketing writes - since they were invented in 1995, Quick Response (QR) codes have been through a series of incarnations and struggled to find a meaningful role.

They have also been the subject of much innovation as well as controversy – depending on where you live.

But the QR code is back with a new lease of life as part of fintech payments. Let’s take a look at the rise, fall and rise again of the QR code…

Read Jeff Bank’s blog: QR Codes - A secret history.

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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, 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.

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And finally….

How not to sort a list of currencies by Terence Eden.

Terence writes: “Being from the United Kingdom is hard sometimes. When scrolling through a list of countries, we might be found down the bottom as “UK” or near the top as “Great Britain”. Occasionally someone files us under “England” – thus ignoring Wales, Scotland, NI etc. Once in a while, it’ll be “The UK”. Truly, no one has suffered as we have suffered.”

Terence uses a list of countries and scrolled all the way to the bottom looking for the UK, only to find it nestled between France and Greece!

More: How not to sort a list of currencies.