On 15th June, Answer Digital hosted an exclusive roundtable discussion with some large billers and banks. Attendees included: British Gas, Lewisham Housing Association, Affinity Water, Aviva, HSBC, Santander, RBS, Bacs, and Toynbee Hall. The purpose of the event was to present and discuss the Answer Digital Request To Pay (RtP) proposition and identify how it will be launched in the market.
RtP has been identified as one of the Solutions that meets End User Needs in the Payments Strategy Forum strategy document: “A Payments Strategy for the 21st Century”. It is also cited as one of the key new services that will be enabled through Open Banking. The recent Bacs Direct Debit consultation also concludes with the need for an RtP service to meet the evolving needs of customers.
At our roundtable discussion Michael Chambers, Bacs CEO, presented the latest trends for Direct Debit and the key findings from the DD consultation. While the market waits for the implementation of Open Banking, and the development of the New Payments Architecture, Direct Debit presents an immediate opportunity to offer RtP to consumers. There is a significant segment of consumers who want to use Direct Debit but are unable to do so due to fluctuating income patterns. Giving them flexibility and control on when their Direct Debit is paid would enable them to reap the benefits of the scheme.
Direct Debit volumes grew by 4.9% in 2016, to over 4 billion transactions per year. It remains the most popular method of payment for consumers, and continues to grow into new sectors. The recent DD consultation identified the need for “Flexible Direct Debit” and “Pre-authorised Direct Debit” to meet the needs of consumers. Both are satisfied using the RtP proposition.
Key components of the proposition:
Answer Digital has been working on RtP for several months. The basic premise of the proposition is very much in line with the concepts discussed by the Payment Strategy Forum and has the following key components:
An RtP engine that manages...
The rules - the biller determines how many times a customer can defer their payment; and if they only make a part payment what happens to the outstanding amount.
The workflow - the RtP engine takes a data feed from the biller and communicates with the customer. It controls the payment flow and feeding back to the biller confirmation of which payments have been made.
The interaction between all parties - the RtP engine is flexible enough to communicate to each party through a variety of means.
What is the customer interaction...
RtP uses one of a number of channels to notify the customer of a due payment. This could be via an app (an existing banking app, a biller app, or a standalone app), text message, chatbot, or even a QR code on a bill. The customer has the option of agreeing to pay, deferring, or making a part payment.
How does the payment work...
The Answer Digital proposition is payment agnostic, but proposes Direct Debit as a good starting point. The RtP engine can therefore submit a Bacs Direct Debit file into the clearing on behalf of the biller. Once Open Banking goes live a real time payment can be initiated via the customer’s account. The payment mechanism used will vary by customer and by product.
What's next and how you can find out more...
The roundtable discussion identified that a lot of research has been done with customers and their appetite for RtP. However, there has been limited discussion with billers. We also identified that key barriers billers will need to overcome to launch RtP are: IT changes to their billing systems, creating a business case, and impact on cash flow.
Our roundtable attendees agreed to meet again to progress the proposition. If you would like to join us for our next discussion please contact: firstname.lastname@example.org.