VocaLink: At the forefront of payments innovation – David Yates
VocaLink operates world-class payment clearing systems that underpin most of the UK's electronic payments, including BACS, the Faster Payments Service and the LINK ATM network. Future Banking talks to David Yates, VocaLink's CEO, as he outlines some of the company's main priorities.
The current account switch service makes it quicker and easier for customers to move from one bank or building society to another. What is VocaLink's role?
David Yates: We designed and implemented the technology, while the switching procedure is managed by the banks, under the auspices of the Payments Council. It makes it easier for consumers and small businesses to switch accounts. They can now do so within seven working days, when it used to take 18 to 30. There is no comparable service anywhere else in the world.
There has been a 25% increase in the number of accounts switched this year. Everything is working well, and we are achieving 100% systems performance. We are now looking at the applicability of the technology to other switching services - for example, utilities, such as gas and electricity.
You provide the technology for FAST, Singapore's real-time payments service, launched in March 2014 by the Association of Banks in Singapore and modelled on the UK's Faster Payments Service. How did you win that contract?
By demonstrating the success of Faster Payments and by partnering with BCS Information Systems, a local provider, to design and implement the FAST platform. Businesses and consumers can now electronically transfer funds between accounts held at participating banks in seconds, instead of the two or three business days it used to take.
The Singapore product is a generational update on what we have in the UK. It is built around the ISO 20022 data standards, which allow the transmission of much more information than just the payment data, such as payroll, tax and invoice data. It can 'pull' payments - direct debits - as well as 'push' payments - credits. The UK service can only push payments.
We are currently involved in bids to banking associations and central banks in more than ten countries to provide similar 'immediate' payment systems.
VocaLink has developed Zapp, a function that will reside in mobile banking apps to allow users to make real-time payments to retailers when shopping online or in a store. What exactly is it?
Today, most mobile payments to merchants are initiated by the consumer, using the their debit or credit details, but the user experience is poor because of the amount of information that has to be inputted. This has given rise to a number of simpler alternative methods, such as PayPal and Amazon 1-Click, but they still require the consumer to set up a specialist mobile-payment account and initiate a payment. A banking app incorporating Zapp works differently, because the payment process is initiated by the merchant, not the consumer. The merchant sends a 'push payment' request to the consumer that the consumer accepts or rejects.
Reversing the payment flow achieves several things. One is that the consumer never discloses any of their bank account details to the merchant, so it is quicker and more secure. Another is that the payment request has an expiry date, so if the consumer does not say yes, it expires. We have signed up several banks and all the major merchant acquirers. We will launch Zapp next year.
You provide the technology for the Payments Council's mobile-payments initiative Paym. What is so innovative about it?
Its simplicity. Paym has achieved tremendous momentum, with more than 1.55 million registrations to date.
The service allows people to use their existing mobile banking or payments app to send money to friends and relatives by keying in only the recipient's mobile number, not their bank details. The only requirement is that the recipient registers their mobile number as the proxy for their bank account number.
What are VocaLink's broader strategic goals?
We want to be the best core utility to the UK banking industry consumers and businesses, we want to expand by adding to those core capabilities and we want to export some of those capabilities to other countries.
Some people say the UK banking industry is not innovative enough. What do you think about that?
It is in the payments space; we have one of the best payments infrastructures anywhere in the world. The Faster Payments Service is the only scale service that delivers near-instant value, and we have started to export our technical capabilities.
Our main goal is to make electronic commerce come to life. The aim is to ease the flow of data between supplier and consumer, not just payments instructions but all the related commercial data that goes with them as well.