bobsguide had the chance to catch up with VocaLink’s Payment Services Director, Chris Dunne, at the International Payments Summit 2014 in London last week. In light of the launch of the Faster Payments Service in 2008, VocaLink is at it again throwing its weight behind the nationwide roll-out of Paym. The industry-wide collaborative project is the first service with the potential to link up every current account in the country with a mobile number. We caught up with Mr Dunne to find out if Faster Payments has now fully integrated itself into the UK payments infrastructure and his predictions on the future of mobile payments.
Thanks for joining us today Chris. How has the event been so far for VocaLink and yourself this week?
VocaLink is the principal sponsor of IPS 2014 this year. We are proud to be here and it’s great to see such a fantastic turn out. The stream sessions and discussions I have participated in have been very positive and insightful. There has certainly been a good mix of relevant topics this year.
Are there any emerging trends or anything in particular you will take away from IPS 2014?
I think the focus on bitcoin this year is a very striking thing considering it was such a peripheral topic of discussion last year. It shows how far the virtual currency has come within a year and its importance in the space. It has been incredibly disruptive and controversial in the financial space and it’s great to see it as a topic of major discussion this year.
This is a very busy time for VocaLink. Would you say you’ve overcome the initial adoption and integration hurdles associated with the Faster Payments launch in 2008?
Yes as always we are incredibly busy! We passed the billion mark this year in terms of total number of transactions since the launch of Faster Payments. The growth remains continual and positive which is fantastic for everyone.
Forecast growth from the Payments Service Directive (PSD) in 2012 cited regulation and banks as the main drivers of adoption for the Faster Payments Service. It’s great to see consumer initiation on this front is also on the rise.
How excited are you about Paym?
With the Faster Payments infrastructure in place, Paym represents the driver for the next set of faster payments volume of growth. This is very exciting.
The rise of mobile banking and its growing maturity in the smartphone age will enable it as an initiator of transactions in light of Paym coming to market. The hurdle now is initiating new recipients into the service.
Simplicity has always been an adoption barrier for consumers – do you think Paym will overcome this? It’s certainly a step in the direction of mainstream form of payments.
I think this represents one of the first big steps in breaking the very traditional link between the customer and bank account. It represents a step away from the more familiar model of sort code and bank account as a means of transaction authentication or initiation.
The norm of current account switching, which has been live since last year, has been aided by the banks actively marketing as well. Paym will certainly increase consumer mobility.
You wrote in a guest piece back in 2012 that the industry is in a state of flux in light of the credit crunch shadow, increased regulation and decreased customer loyalty – do you still stand by that?
I have already mentioned its continued relevance in terms of consumer loyalty. From a regulatory perspective I think it is even more relevant now.
The Financial Conduct Authority (FCA) is setting up the Payments Service Regulations (PSR) – which is formally due to come in next year. The PSR is already forming to help it gather momentum and hit the ground running in 2015. This will have a big impact on payments and retail banking.
Moreover, in September, the FCA will be commissioning two studies. One will analyse current account switching with the other focussing on the costs and benefits involved in account mobility.
What do you see as the game changers in the payments landscape this year? What’s in store for VocaLink?
I think there is certainly going to be greater customer choice around current accounts. Tesco and Virgin Money’s introduction into the current accounts market is going to make waves. I think they are going to have a big presence in the market.
From a mobile perspective there is going to be a lot of activity. With Zapp coming into the market the use of mobile payments from businesses and merchants is going to be an area to watch. Integration and adoption will be essential in determining the direction of mobile payments.
I think we will continue to see the ongoing emergence of niche payment players in the market. They have some fantastic ideas and perspectives yet lack the critical mass volumes for market adoption. As a result there will be increased collaboration with bigger market players. This could be in the form of partnerships or straight acquisitions.