Education: the secret ‘sauce’ for the successful implementation of payments regulation
It’s 1997 and Tony Blair has just been elected prime minister, Katrina and the Waves have won the Eurovision song contest and Cool Britannia is starting to swing. The new prime minster quickly set out his priorities for office and ‘education, education, education’ is placed at the very top of the political agenda. Whilst one may argue that such a reality has never truly matched this rhetoric change; the importance of effective, accessible and inclusive education cannot be underestimated. But what part should education play in payments and what has education got to do with the future of payments regulation? I would argue that payment providers ignore embedding end user education into their regulatory change programmes at their peril.
Put simply, customer education refers to the set of activities or processes a business puts in place to equip customers with the knowledge and skills needed to make the most out of its product or services. As an industry we should ensure that education is more than just a regulatory or compliance response. A positive consumer-focused education programme will increase trust, build confidence and generate loyalty. Conversely, a poorly designed consumer education programme will lead to complaints, disenfranchisement and a prize for the provider’s competitors. In the UK, we have the benefit of two significant payment related initiatives that prove the case for the role of clear and impactful consumer-focused education when successfully delivering significant change.
- Valentine’s Day in 2006 saw the successful introduction of chip and PIN in the UK. Described by the UK Cards Association (now part of UK Finance) as the largest change to the way we pay since decimalisation in 1971. The multimedia campaign ‘Safety in Numbers’ was created by Saatchi and Saatchi and played a significant role in the awareness, consumer adoption and continued smooth operation of card-based transactions. The ‘Safety in Numbers’ campaign cemented the successful introduction of chip and PIN across the UK.
- From its launch in 2013, Bacs Payment Schemes Limited (now part of Pay.UK) recognised the importance of communicating with consumers to promote a smooth, simple, reliable and stress-free current account switch experience. A clear communication programme focussing on awareness, confidence and trust that led to over six million individuals, small businesses and charities choosing to make a significant financial decision.
Having led transformational change in payments both at a large bank and as a Payment System Operator of a systemically important payment system, my experience is that we must not assume that everything is straight forward from an end user perspective, we must explore potential unintended consequences before it is too late and we must never assume that the customer won’t be interested. Instead, there are many facets to these considerations and the mantra of ‘education, education, education’ should feature centre stage.
In fact, the current roll out of Strong Customer Authentication (SCA) is providing a real time case study on the importance of end user communication. Receiving a ‘payment declined’ message at a Point of Sale (POS) device is not helpful and fails to communicate to the person purchasing their morning latte that SCA means that the contactless payment needs to be verified via CHIP and PIN this time. Equally the Barista needs to understand that a SCA check is being undertaken rather than believing the customer has drained their bank account dry.
From a fraud prevention perspective, SCA should be a step forwards but without an end user understanding of the reasons for a PIN check this could lead to people abandoning their use of contactless payments – beware of unintended consequences.
There are some great examples of payment providers implementing regulatory change supported by strong educational initiatives. For instance, electronic billboards in the windows of Royal Bank of Scotland (RBS) stating that all banks will be checking contactless payments more often (so be ready with your PIN!). These campaigns are accompanied by the hashtag ‘#ItsReallyMe’, a fantastic example of an education imperative being soundly executed. There are clear examples that challenger banks too have also risen to the SCA education challenge. Monzo’s use of creative in-app and watch notifications pre-warn that, rather than one’s next transaction being contactless, they will need to verify the next transaction with a PIN.
My premise is that if we propose that the primary directive of schooling is to make students happy, confident, secure and valued then, as the payments landscape enters a period of transformational change, we should apply this principle to payments. The regulatory pathway beyond the second Payment Services Directive (PSD2) should make consumers’ relationship with their banking partner a happy, confident, secure, inclusive, accessible and valued one. End user education should feature as an integral requirement of both the regulation itself and its implementation.
Whilst my argument is for appropriate end user education requirements to be built into the regulation, there is a danger of the extremes of a diktat at one end of the spectrum and the potential weakness of ‘best practices’ at the other. Regulation should include a specific requirement for appropriate principles-based education to support the regulatory outcomes of change. Each institution would then be accountable for delivering against the principles defined within the regulation.
Having suggested that payment providers ignore embedding end user education into their regulatory change programmes at their peril, perhaps we ought to be bold and adopt the principle of delivering effective end user education for the soon to be launched Request to Pay (RTP) and Confirmation of Payee (CoP) initiatives?
If the secret ‘sauce’ of successfully implementing payments regulation is education, then the principle of ‘education, education, education’ moves beyond compliance for compliance sake, reinforces our desire to ‘Treat Customers Fairly’ and should be a central tenet of our principles of business.
This article is part of a collection from the EPA’s whitepaper ‘The Future of Payments Regulation: Voices of the EPA’. The whitepaper has been written by myself and fellow members of the EPA’s Project Regulator as we hope to start an important discussion on the future landscape of payments legislation. To download the full document hot off the press click here: www.emergingpayments.org/article/the-future-of-payments-regulation-voices-of-the-epa/