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A foundation has been laid and now is the time to double down to accelerate innovation.
The concept of real-time payment processing both from an operational and cost advantage is big news yet only 36% of all electronic payments in the UK are now via the Faster Payments Service (FPS)1. One could argue that FPS has fundamentally changed the nature of payments, user experience and the real economy. But in reality, the race to real-time has been slow and steady rather than a gold rush.
There are daily reminders of the great business innovations made possible by FPS such as ordering and paying for your daily decaf latte before you get to the café, receiving real-time payments as part of the gig economy or adding funds to your teenagers’ pre-paid card. How many more ideas could be realised from those little life-enhancers to huge game-changers, if it was easier for innovators to access FPS.
In a June 2019 report, Accenture summarised the aims of FPS as “boosting speed, competition and innovation in UK payments” and concluded that it has “delivered on every count”. But that risks sounding like job done. As if we’ve reached our destination, when really the journey has only just begun:
The most significant growth in the uptake of FPS, and the most exciting innovation in leveraging the UK faster payment rails, has been in the past three years since challenger banks and non-bank regulated financial organisations were allowed to get on board.
To drive future innovation that has far reaching impact on the real economy, we need to all work harder to speed up the route to market for potentially great new B2B, B2C and C2C business models to access real-time payments. And that means giving more of the forward-thinking companies easy, flexible and cost-effective access to Faster Payments. Let’s begin by removing the barriers around technical access and easing the legislation around clearing, settlement and liquidity.
Looking ahead, what is the next, big innovation milestone in the payments landscape? Most likely it is the introduction of NPA which promises a more rapid adoption of real-time payments and richer payments data sets, insights and automation all served up through simple, secure and accessible APIs.
Whatever comes next, one thing is certain, business as usual just isn’t enough.