Social value – at the tap of an app

To kick-start 2021, Tony Killeen told the FinTech Times that FinTech now needs its “Rashford moment”.

To the founder and entrepreneur of allpay Limited - a provider of complete payments services including credit cards, pre-paid cards, direct debit and bill payment collection – the ‘Rashford moment’ is the point at which (social) problem solving is a how-to lesson for Government from those that have ‘been there’ and are willing to ‘go there’.

For FinTech, says Killeen, that means opening up open banking, specifically, the adoption of bill payment solutions – an initiative borne out by allpay’s research as the pandemic pitches household finances over the brink.

“If FinTech is to prove its worth beyond COVID, innovate to accumulate must account for inclusion as the fallout from the pandemic pushes the prospect of a cashless society ever closer,” he said.

The way, then, to make social value pay.

As COVID’s first wave engulfed the UK, an allpay survey exposed the extent to which FinTech can shift the pre-pandemic payments landscape.

The survey findings were released with the sector working to stark pre-pandemic assessment of financial exclusion in the UK showing an estimated 1.3m adults lacked a bank account with 3.1m having one or more high-cost loans charging more than high street banks.

“It’s too easy, if not dismissive, to set those effectively paying what amounts to a poverty premium against the estimated 97% of UK adults holding an account they can use to make day-to-day payments and transaction – a current account in around 96% of cases.

“To this end, open banking becomes both the question and the answer,” said Killeen.

The allpay survey took in a UK wide 2,000 strong sample as an insight into payment methods for household bills over 2019-20.

Those pre-pandemic bill payers were still invested in cash, with Cash Office payments taking preference over options such as PayPoint, Post Office and Payzone.

The stats also acknowledged an ongoing decline in Direct Debit use as cash remained a key focal method with a steady rise in Bank Transfer, Credit Card and Standing Order payments over the past three years.

Monthly payments were the most popular frequency in all household bills, although the stats show payees have increased their preference in quarterly and four-weekly payments - quarterly instalments for Rent (61%) and Council Tax (50%) significantly increased year-on-year.

Mary Cotton, allpay Head of Operations, said the continual reliance on cash – as shown in the survey – was shared amongst a significant number of payees – to the extent that it represented an average of 7% for each bill payment.

“With many businesses moving towards a cashless society, the stubborn rate at which the method remains showcases its value to many in the UK payments space.

"This years’ results demonstrated that 13.5% of rent payments alone were made utilising cash, with more than 75% of these made at business offices - often cited as a cost-intensive source,” said Cotton.

But the survey findings also exposed reduced consumer confidence in paying household bills, with fewer fully confident in managing money to the extent of a year-on-year decline of 2% to just 78%.

Just this month, the Resolution Foundation think-tank released a report revealing more than a third of the UK’s poorest families spending more on food, gas and electricity – after years of weak growth in living standards.

The allpay respondents referenced “ease of use” as the most common reason when choosing their payment method and nearly 1,000 respondents said that reminders via text or email would make paying their household bills easier, with the stats showing Direct Debit is still the most popular payment type across all household bills, with an average take-up of 55%, though usage decreased by 5% across three years.

Rent payments registered the lowest share against all other bills (26%), with the most popular across Internet & Phone (70%) and Electricity & Gas (61%) bills.

Debit Card payments were the second most popular payment method, despite showing a small decline (5%) on average per bill from last year.

Take-up for the second consecutive year is highest in both Rent and Insurance payments, with the use of Credit Cards the largest increase of all payment methods across the three years (2.2%).

Monthly payments continue to be the most popular frequency in all household bills, although payees have increased their preference in quarterly and four-weekly payments.

Quarterly instalments for Rent (61%) and Council Tax (50%) significantly increased year-on-year.

For FinTech, the allpay findings add up to opportunity inherent in the Green Paper Government slipped out between Christmas/New Year outlining intentions toward the ‘transformation’ of public sector procurement.

Essential to this transformation are measures encouraging awards to a more diverse range of suppliers pitching to contract terms and tender evaluations intended to take a broad view of value for money – with an emphasis on social value.

This includes award criteria for evaluating final bids and scoring their quality, to encourage ways of working and operational delivery that achieve social value objectives.

As advanced by Government, this approach allows buyers to include criteria that go beyond the subject matter of the contract and encourage suppliers to operate in a way that contributes to “economic, social and environmental outcomes based on the most advantageous tender"

allpay has just recently teamed up with the NHS and other partners to transform the national Healthy Start scheme, with digitisation pitched as making the scheme simpler to access, easier and more flexible to use in replacing the present paper-based voucher scheme from February this year.

This transformation is expected to incrementally increase the support of the Healthy Start Scheme from 300,000 beneficiaries a year to circa 500,000 a year once fully transitioned to a digital solution – with the potential for up to 750,000 individual applicant accounts to be created throughout its full term.

allpay will use its Prepaid Solution to facilitate top-ups to the scheme’s new payment cards, enabling funds to be spent on the likes of fresh milk, fresh or frozen plain fruit and vegetables and infant formula, in all major supermarkets, many local shops and markets.

And allpay has already seen how this can work with the success of its solution for the Scottish Government as it shifted its stance on food poverty – a solution saluted as Social Inclusion Project of the Year at the 2020 Payments Awards.

The allpay initiative enabled the Scottish Government to disburse vital funds to low-income households while retaining full autonomy over those funds - managing the scheme through a streamlined, automated process supported by advanced analytical tools to use.

Named Best Start Foods, the prepaid card programme allowed for the purchase of “healthy” products from retailers free of the requirement to register that came with the previous voucher scheme – with the card accepted in any grocery store displaying the Mastercard logo.

To date, around 39,600 cards have been issued to those eligible for the scheme with a total load value closing in on £10m.

Some 697,646 transactions have occurred since the scheme went live in August 2019 showing the prepaid cards are being utilised and provide real value for the underserved.

With a hint at the extended analytical capabilities available in open banking applications, the on-line portal allpay opened up for the Scottish Government allowed for real-time reports on successful and unsuccessful transactions to see where the funds were being spent - providing improved auditing capability.

So, it’s not such a leap to see how to open applications can outline not just payments but capacity to pay – with all the implications in that for a post-pandemic public sector.

And in moving away from the ‘old school’, Killeen is keen on the potential open banking also offers for teaching the essentials of personal financial management.

Social value at the tap of an app.

“Sure, the sector’s response to Covid is rightly recognised as bold. But the future’s coming so fast it will soon be the past. We need to be bold enough to evolve and ensure no-one is left behind,” said Killeen.

allpay/TLF Consumer Survey 2019-20: Key Findings

  • Credit Cards, Standing Orders and Bank Transfers provide the three largest increases across 2018-2020
  • Cash payments remained static across the 3 years – representing 7% average across each bill
  • Debit Card usage increased slightly across the 3 years – albeit a small decline YOY (2019-2020)
    • Notable 3-year increase in Mortgage payments
  • Credit Card usage has increased the most out of all channels – 2% on average across each bill from 2018-2020
  • Direct Debit is most popular for the third year running – although averages fell by 5% across each bill
  • Rent and Insurance payments lost 15% and 10% market share across the 3 years
  • Direct Debit take-up is highest amongst Electricity, Gas and Internet/Phone – with more than 60% of respondents opting for the channel
  • Rent has the lowest Direct Debit take-up across all household bills – standing at 5% with a loss of nearly 15% market share over 3 years
  • Next lowest share sits with Insurance at 5%
  • Bank Transfer, Cash, Cheque and Credit Cards all increased their average market share year-on-year
  • Credit Card usage increased by nearly 49% YOY for Council Tax payments
  • Company offices to make cash payments increased across all household bills
  • A 46% year-on-year increase for rent – with only 24% making payments at PayPoint, Post Office and Payzone
  • Respondents referencing “ease of use” as the most common reason when choosing their payment method
  • 998 respondents said that reminders via text or email would make paying their household bills easier
  • The usage of PayPoint, Post Office and Payzone declined across every household bill – with Cash Office payments taking preference
  • 76% of cash payments for rent taking place at Cash Offices
  • More than 50% of Council Tax payments remain at PayPoint, Post Office and Payzone outlets – a 7% decrease over the past three years
  • Paying Online continues to be the most favourable method for those paying by Debit Card – with the usage of Mobile App’s increasing rapidly
  • Mobile App usage for Debit Card payments has increased significantly across Water Bill (83%), Rent (100%), Mortgage (90%), Council Tax (58%), TV Licence (46%), Insurance (45%), and Internet/Phone (72%)
  • A significant decline in the set-ups of Direct Debits – reflected in the decrease of overall respondents utilising the payment method across each of the household bills
  • Set-ups of Bank Transfers has considerably increased – reflected in the sharp rise in Bank Transfer payments for all household bills
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