Out with the old, in with the new

Paym: I hardly knew you

Paym is (and from tomorrow (7 March 2023) was) a mobile payment system operated by Pay.UK and offered by the majority of the UK’s banks and building societies. Recipients are identified by their mobile phone number rather than their bank sort code and account number. 

At the end of 2022 the service was available to more than nine out of ten current accounts, with more than 5.8 million registrations and over £2.6 billion sent since Paym launched in April 2014. However, the 15 banks and building societies who provide the service decided in September 2022 that the Paym service would close permanently to customers on the 7 March 2023

If Paym has passed you by then here’s a quick briefing: Paym: I hardly knew you.

Paym: I’ve got a soft spot for you

Back in November 2022 Pay.UK announced that Paym was to permanently close in March 2023. Low use and new technology seems to have driven the decision but why, in an age of obsessive mobile phone use, did the UK’s mobile payment service fail to take off? 

On its last day of operation Peter Cornforth from Answer Pay admits that he has a soft spot for Paym!

In this guest blog Peter Cornforth marks the last day of Paym the UK’s mobile payment system.

Out with the old, in with the new

I have to admit I have a soft spot for PayM.  

After seeing first hand the impact of mobile payments in East Africa I was excited by the prospect that PayM could facilitate a similar service in the UK.  Sadly, it was not meant to be.  Mention PayM to the average punter and he’d have no idea what you’re talking about.  Patchy support and lack of cohesive strategy between banks meant that the mobile phone number to account number directory never got to deliver on its promise of underpinning a UK mobile based P2P money transfer service.

If I ever need to send money I tend to turn to my mobile banking app.  I’ll check first of all if the person I’m paying is in my regular payee list, if they are a sigh of relief (less data entry!) double check the account details are the same as I paid before, enter the amount I owe, go through the intentionally jarring security steps then confirm the transaction.  The pain points are probably the checking the account details especially on a mobile when I’ll be trying to switch between apps (don’t get me started on Google Pixel’s screen navigation) and the security steps.  As highlighted, if I’ve not paid this person before there is a whole lot more data entry to do as I’ll need to input sort code and account details.  This is something I’m paranoid about so whilst I know Confirmation of Payee is there it’s still something I’ll double/triple check before proceeding.

Things are easier in the Netherlands.  

They don’t just have a payment method, they have a new verb, “to Tikkie”.  There’s a great review of it from an outsider here.  Essentially it allows you to send payment links person to person from the Tikkie app to Whatsapp.  

The stats are impressive: “50% of Tikkies are paid within 30 minutes”, “85% of requests are completed within a day”.  What makes this easier than my current bank app is that whether the payee is known to me or not doesn’t matter as the payment link has all the transaction details prefilled, all that’s left for me to do is authorise the transaction.  Even for my regular payees I don’t even have to look for my app, I don’t have to double check their bank account details in another channel or even enter the value of the transaction – just authorise.

There are attempts to replicate this success in the UK and other markets by leveraging a combination of SMS/email and Open Banking.  It has the same ease of use with the transaction details being pre-filled.  What it doesn’t have is trust.  

Authorised Push Payment fraud is at plague proportions in the UK and Open Banking is not a uniform experience with each of the 350 different providers presenting a different flow.  What this means is that I have no confidence that the person asking me for money is a legitimate business or a fraudster.  One business we talked to said that trust was so low that their Pay by Link service only had a conversion rate of 10%.

What is needed is the security of my bank app with the convenience of authorisation only payments.  The answer is Request to Pay.  Request to Pay is a closed network where the identity of those requesting money is known (unlike SMS/email!).  Suppose you want to join the service using your mobile banking app.  Your bank using your transaction history can suggest a list of payees that you might want to receive payment requests from in the future, giving you the option of avoiding requests from your brother/sister or any unsolicited requests.  Your bank then notifies your payees so that when they want to send a request they can easily select you from their approved list.  Suppose that the payee wasn’t in your transaction history so you’re not in their approved list, no problem you can give them your bank app address or a proxy (e.g. phone number) so that they can also send you requests.

When a request is sent it arrives directly into your banking app and as you can use this with all of your suppliers you can aggregate the requests to easily pay who you want, when you want and how you want.

What results is a trusted system where the identities of money requesters are known, the eradication of unsolicited requests and easy payments.  

So, who needs PayM?

Peter Cornforth

Peter Cornforth is the Commercial Director at Answer Pay – Peter is a payments product specialist with over 10 years of experience in the payment arena with Santander, Vodafone, Amazon and Paysafe.

Click here to simplify remote payments and integrate Request to Pay.

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