The constant changing landscape of international and domestic payments presents both challenges and opportunities. Whether we’re looking at cheque processing, cross-border Euro payments, payments through CREST, or the use of ‘virtual’ accounts and contactless technology, there’s constant evolution. These external factors mean we need to maintain robust yet flexible banking solutions so we can provide our clients with the payment services they need. We’re involved in a number of payment-related projects - here’s a flavour of what we’re working on…
Developing our international payments capability
Our ability to make payments across the world in any currency is now a standard, yet essential requirement. Time, cost, certainty and security are all important considerations that influence the performance of our service. Globally, increasing cheque clearance fees and the decreased use of cheques entirely are driving the need for complete electronic payment options.
We are investing in our Global Payment Service to adapt quickly to changes in global banking requirements therefore reducing the likelihood of inconvenient payment rejections.
While we are currently able to make payments in 203 countries across 66 currencies, we are looking to increase our reach to accommodate an expanding client base and the geographical locations of their shareholders and employee shareplan participants.
Changes to Single Euro Payments Area (SEPA) payments
From February 2016, it will no longer be necessary to include the Bank Identification Code (BIC) when making SEPA payments from Ireland. This comes into effect in October 2016 for the UK. Whilst removing the need to provide a BIC appears simple enough, it breaks the historic pairing of the bank code and bank account number (e.g. BIC and IBAN). This shows the progress made by the banking industry to simplify the process to receive and effect cross-border Euro payments.
Looking for opportunities in technology
Virtual accounts and contactless transactions are a growing trend. While mainly used in taking payment for services than in distributing funds, this is an area of the market where innovation is strong. We are watching this segment with interest to identify opportunities of benefit to our clients.
Cheque imaging in the UK
The echo of the events of 11 September 2001 is still prompting change in the UK, in this case in relation to cheque processing. Cheque clearance in the US came to a standstill in 2001 – grounded flights meant cheques could not be physically delivered to banks. As a result, the country moved to cheque clearance by image, instead of physical paper.
Whilst cheques are here to stay in the UK, the Cheque and Credit Clearing Company has confirmed that HM Treasury is committed to implementing clearing via cheque image by 31 July 2016, with a phased rollout completed by 31 October 2017. We have been part of the consultation process as this initiative is of particular interest to us.
From a retail perspective, this could mean a shareholder could pay in a dividend cheque with their mobile phone by simply taking a picture of it and sending it to their bank. In addition, they also have certainty that cleared funds will be available in their account by 23:59 on the next working day.
Current account switching
The Current Account Switch Service from the UK Payments Council created a mechanism for the banks to notify BACS remitters, including ourselves, of the new account when a beneficiary has moved between banks. This process redirects funds to the new bank account, reducing the number of rejected payments and enabling us to update the mandate details we hold.
The new UK Payment System Regulator (PSR)
In April 2015 the PSR became fully operational. The PSR is a new subsidiary of the Financial Conduct Authority (FCA) with its own statutory objectives regarding the promotion of competition, innovation and service users.
This entity does not replace the UK Payments Council but they will work closely together to introduce change. We will be monitoring developments around the ‘PayM’ initiative, whereby payments can be made using a mobile number. This is designed for small value payments at the moment but is destined to grow.