Snippings

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The long overdue migration of intangible financial services, which are purpose-built for digital distribution, away from pens and paper will be facilitated by digital ID verification

From Shayne Elliott’s revolution at ANZ | afr.com

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That’s the world in which Blue, the new Twitter-verified-users-only offering from dating app Loveflutter, is claiming to operate in. “In an era of catfishing and fake identities, authenticity is key,” says the accompanying press release, “which is why we’re leveraging Twitter’s world-class verification system to make dating safer.”

From In the online dating jungle, unverified by Twitter doesn’t mean undesirable | Sam Diss | Opinion | The Guardian

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The UK’s Payment Strategy Forum has delivered a blueprint for the future of the nation’s payment system, setting out design and implementation approaches for the construction of a new ‘National Payments Architecture’.

From PSF lays down blueprint for new UK payments architecture

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Since publishing our Strategy, we have reviewed the approach and agreed on the following detriments as focus areas for the proposed data sharing framework:

1. Inclusion of bad actors: Obtaining sufficient KYC information to identify bad actors requires the use of multiple external data sources and systems during on-boarding and ongoing due diligence. Incomplete, in-accurate or out-of-date SME customer data hinders the detection of bad actors.

2. Poor customer experience for good actors: Limited data sharing among the PSPs and other sectors such as utilities and telecommunication providers lead to significant duplication of effort if a customer moves to another provider or extends their products. data hinders the detection of bad actors.

3. Barrier for small PSPs: Privileged access to SME data can be viewed as a barrier for small and new entrants, narrowing access and weakening competition. data hinders the detection of bad actors.

4. Inefficiency in the SME KYC process: Customer identification processes can be complex, protracted, and expensive, despite not being a key competitive differentiator for PSPs and providers in other sectors. data hinders the detection of bad actors.

5. Lack of trust: The fear of fraudulent actors potentially being able to penetrate the digital environment and get access to customer data leads to an erosion of trust in society.data hinders the detection of bad actors.

The plan is to start with SMEs. 

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In our Strategy, we prioritised the collaborative development of requirements and rules for 3 EUN solutions. These are:

1. ‘Request to Pay’ which addresses detriments arising from a lack of sufficient control, flexibility and transparency in the current payment mechanisms to meet the evolving needs of some end-users. Apart from anything else, this is why there’s no need for “pull” payments in NPA.
2. ‘Assurance Data’ which addresses the lack of adequate assurance to the payer that they have sufficient funds to make a payment; that they are making the payment to the intended payee’s account and status of the payment once they make the payment. Right now, the assurance services envisaged are confirmation of available funds, payment tracking and the slightly more complex confirmation of payee.
3. ‘Enhanced Data’ which addresses the limited capacity, in current payment systems, to carry more structured data alongside the payment.

The reason why I call the payee confirmation service more complex is… well… it’s more complex. As I said in connection with this last year:

There’s a long way to go with this though, because there are privacy and other issues. Is it any of my business what the name on your account is?

From Are the banks telling you that you may as well use bitcoin? | Consult Hyperion

The CoP will be a real-time 24/7 services and the response provided to the payer will be as clear and unequivocal as possible to allow the payer to make a decision that he or she is making the payment to the intended payee. All to the well and good. But you can see the problems lurking in the shadows of this apparently reasonable requirement. An obvious issue is that data protection regulations must be considered to ensure that payer data is handled lawfully especially in the case where the account information is played back. If you send a payment to your dentist, for example, should be provided with your dentist’s real name, address and other personally-identifiable information (PII). I would have thought not. Then there’s also the issue of accuracy and liability for incorrect information. And consider also that is some cases the system must not return the “correct” information (as part of law enforcement operationa, for example).

This isn’t just about bank accounts and instant payments, of course. If it was, I wouldn’t be blogging about it. I hate to say it, but the problem and the solution are all about identity.

From Super-complaints but no super-solutions | Consult Hyperion

One safeguard that the PSF puts forward is that the payee confirmation service can only be utilised for the purposes of making a payment and it assumes that PSPs will ensure relevant safeguards are put in place to ensure prudent use (e.g., to guard against phishing, profiling etc.). OK, so I may sound like a broken record on this, but without a working digital identity infrastructure in place, we will end up with something incomplete and expensive getting hacked up to support NPA implementation alone.

 

I wrote last year that

I imagine that an outcome of Payment UK’s deliberations on payee confirmation may well be the creation of a database of “paynames” (i.e., £dgwbirch) to make casual instant payments even easier.

From There you go bringing class into it again | Consult Hyperion

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Cifas, which aims at reducing financial crime in the UK, said that the number of “misuse of facility” frauds involving those under 21 years of age, has risen sharply.

From Gangs force thousands of teens to become ‘money mules’ | The Independent

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Payment Strategy Forum’s “Blueprint for the Future of UK Payments” (July 2017) says that “tactical solution work has been progressed to provide early benefit in the fight against financial crime in the detection of money mule accounts, and piloting methods for funds repatriation. The tactical solution was handed over in June, and implementation is expected by the end of 2017”. I’m not privy to the work of the Forum

Many years ago, I worked on a couple of projects looking at the future of payments. My conclusion, and that of my colleagues, was that the payment systems of the future would very likely be push rather than pull. The reasoning is quite straightforward: push payments are simpler and cheaper (pull payments, such as Direct Debit in the UK, are a hack to get around a lack of connectivity) and if there is a need for more complex instrument or services then they should be a layer on top of a cheap, fast and transparent push infrastructure. Earlier this year, the UK’s new payments infrastructure was set out

The UK’s Payment Strategy Forum has delivered a blueprint for the future of the nation’s payment system, setting out design and implementation approaches for the construction of a new ‘National Payments Architecture’.

From PSF lays down blueprint for new UK payments architecture

I was naturally very excited to see what this new architecture would be, and one of the key phrases that I was looking out for was “push payments”. This is because many years ago I worked on a couple of projects looking at the future of payments that featured these exclusively. My conclusion, and that of my colleagues, was that the mass-market payment systems of the future would very likely be push-only rather than push and pull. The reasoning is quite straightforward: push payments are simpler and cheaper (pull payments, such as Direct Debit in the UK, are a hack to get around a lack of connectivity) and if there is a need for more complex instrument or services then they should be a layer on top of a cheap, fast and transparent push infrastructure. As I wrote back in 2014…

pull payments are a relic from the bygone past when consumers did not have devices and there was no network to connect them to

From Push payments are a win-win (and a lose) | Consult Hyperion

Therefore, I have made the transition to push (or “the push for push”) an input to the process of creating payment organisation strategies for some time. Hence I was very interested to read in the blueprint referred to above, the Payment Strategy Forum’s “Blueprint for the Future of UK Payments” (July 2017), that…

In summary, we concluded that a push only model offers many advantages but recognise that for some in the industry, changes will be required to enable them to deliver existing pull based payments products, such as Direct Debits.

This is as it should be. The era of III (instant, invisible and irrevocable) payments is here and not only in the UK. Countries around the world are firing up their faster payment networks and in Europe the SEPA Instant Payments scheme goes live in November. 

The EPC’s SCT Inst scheme will enable interoperable euro credit transfers in SEPA for transactions of up to €15,000 initially to be available on the payee’s account within ten seconds.

From SEPA INSTANT CREDIT TRANSFERS ARRIVE – Payments Cards & Mobile

There is a big picture here: the steady transition to ubiquitous, low-cost, account-to-account credit transfers as a platform for other payment services (if they are required). As this infrastructure becomes more sophisticated (because of, for example, the shift to ISO 20022 XML and the exploitation of enhanced data transport)

Some years hence at a party of some kind in the West Country, I found myself chatting to a farmer. He was telling me about sheep farming, and making the point that it would be wholly uneconomic without massive taxpayer subsidies. Naturally I asked why these subsidies were provided. After all, if management consulting were to become uneconomic, because of the 

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“Farmers receive not just the £3 billion of subsidy, they receive a whole range of other benefits that nobody else in the economy gets.”

From Tax breaks for farmers causing ‘subsidy addiction’, government adviser warns

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“If you’re producing 0.7% of output, receiving £3 billion of subsidies for that output of about £9 billion and being exempted on rates, and being exempted on diesel and being exempted on inheritance tax… it’s kind of a subsidy addiction in the end.

From Tax breaks for farmers causing ‘subsidy addiction’, government adviser warns

Land Value Tax Now! 

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According to Cifas, the fraud prevention service, there has been a huge rise in the number of young people involved in “misuse of facility fraud”, where an account, policy or product is misused by the genuine account holder. There were 4,222 cases involving a person under 21 in the first six months of this year, compared with 2,143 cases during the same period last year.

From Gangs pay teenagers to launder crime cash | News | The Times & The Sunday Times

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What is the finance sector supposed to do? Essentially, it needs to perform a number of basic economic functions. First and foremost, it operates the payments system without which most transactions could not occur. Secondly, it channels funds from individual savers to the corporate sector so the latter can finance its expansion. In doing so, it does the highly useful service of maturity transformation; allowing households to have short-term assets (deposits) while making long-term loans. It also creates diversified products (such as mutual funds) that help to reduce the risk to savers of catastrophic loss. Thirdly, it provides liquidity to the market by buying and selling assets. The prices established in the course of this process are a useful signal of which companies offer the most attractive use for capital and which governments are the most profligate. Fourthly, the sector helps individuals and companies to manage risks, whether physical (fire and theft) or financial (sudden currency movements).

From What’s wrong with finance

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“Around one-third of all point-of-sale transactions were conducted using contactless cards in 2016… As a share of card payments only, nearly two-thirds of all point-of-sale payments were contactless in 2016.”

From Tap-and-go threatens cash economy – Convenience & Impulse Retailing

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