Enhanced Data Crucial in Maintaining the UK Payment System as World Leading
Payments UK publish a new report today evidencing how government, corporates and consumers stand to benefit from linking remittance advice information to payments.
Payments UK published a follow-up on their World Class Payments in the UK report last week, focusing on Enhanced Data with payments. It evidences how government, corporates and consumers all stand to benefit from linking remittance advice information to payments.
The status quo in the UK’s payment system currently limits payers to an 18 character maximum reference, as part of the UK’s propriety messaging standard. Remittance advice data has to be sent separately, frequently via post and email mediums, which burdens the payee in reconciling, matching and accounting for the payments they receive. The capability exists however, to link explanatory remittance advice with a payment at the initiation stage. This has the potential to allow for greater clarity on both sides of the transaction, in identifying exactly what a payment is for, either for single items or in a complex set of payments for multiple items. There are clear efficiency gains therefore to be derived from reducing the demand on payees’ matching processes, thereby allowing for more competitive payment solutions and ultimately greater value for customers.
Indeed, the global outlook does not look favourably on the UK’s current position, as the report highlights a number of countries that have already committed to adopting enhanced data, namely Finland, Denmark, Australia and the US. These countries have all opted/ are opting for the ISO2022 standard for structuring the remittance advice data, heralded by Payments UK as the standard the UK should adhere to, given its prevalence here already and globally. If the UK wants to remain as a world leader in the payments arena and broader financial sector, then the Payment Systems Regulator will need to hold enhanced data central to its strategy, to be discussed in their upcoming Payments Strategy Forum.
If we are to realise this ideal type for future payments however, a number of challenges will need to be overcome. Agreement on structured data models and protocols will have to be established in order to realise efficiency gains via the automation of matching in accountancy systems. Moreover, collaboration will be required in facilitating delivery, particularly around funding the initiative and costing models in such a way that benefits actors accordingly. There will also be the need to future proof against emerging payment mediums such as P2P and the blockchain.
techUK is supportive of the drive to allow for more information in the transmission of payments and has long called for the provision of new payments mechanisms. Greater volumes and better quality of data will allow both payers and payees more confidence in their financial decision making and risk assessments, ultimately benefiting all. In addressing the challenge of collaboration and the need for common technical standards, techUK has worked closely with HM Treasury to establish an open API to allow greater interoperability between financial institutions. In taking the API forward, an agreed approach to enhanced data for payments will prove crucial.
techUK is delighted to be hosting its upcoming Payments Innovation Conference in association with Payments UK taking place on the 4th of July at etc. Venues near St Pauls. More information will be available shortly.
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