Government publishes strategy for reforming payments services

The Government has today published a consultation on the future regulation and governance of the payments industry, Mark Hoban, Financial Secretary to the Treasury, has announced.  The payments industry, which sets strategy on important payment mechanisms including the future of cheques, is central to the functioning of the economy, yet the Government does not feel it has always responded effectively to the needs of consumers.

The consultation – which forms part of a package of measures announced today that will increase competition and consumer protection in the banking sector – proposes reforms that will protect those who rely on more traditional payment mechanisms by ensuring that consumer concerns are taken into account.

The Government’s preferred option is the creation of a new body – the Payments Strategy Board – to monitor and make recommendations to the payments industry.  It would be run by a mixture of senior industry and non-industry representatives, including from consumer organisations.  This board would ensure that competition concerns and consumer views would be fully considered as part of the decision making process.

Mr Hoban said:

“We need a payments system that responds to the needs of customers and is not just run for the banks.  Today’s package of measures is another step by the Government to make sure that the financial sector provides an effective and competitive service to the real economy.”

More information can be found by click on the link below:

http://www.hm-treasury.gov.uk/consult_setting_strategy_uk_payments.htm

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Rapidata joins with IoF on cheque debate

Cross-sector collaboration seeks to safeguard donation levels and examines the viability of cheques for the future

In a joint venture the Institute of Fundraising and Rapidata Services Plc have embarked on a programme that brings together the charity and payments sectors to explore what can be done to preserve and build donation levels in light of: charities’ heavy reliance on cheques in fundraising; the future of the cheque as a payment mechanism; and the need to investigate viable payment alternatives that will meet the needs of charities in future years.

The three-step programme named Cheques: Where Now? will channel expert views, research both sector and consumer audiences on cheque usage and attitudes, and report with recommendations to the charity sector, payment industry and Government.

On the 31st January 2012 the IoF and Rapidata, a Bacs approved bureau and a specialist in processing charity donations, co-hosted the programme’s first panel meeting of experts from across charities, charity sector umbrella bodies and the payments industry.  Discussions included the current heavy reliance on cheques in fundraising, barriers to change, trends in cheque usage, existing and potential alternative payment mechanisms, and an apparent lack of awareness and education around the issue within the charity and banking sectors.

The Payments Council, which sits on the programme’s expert panel, is very supportive of this project and is fully committed to continue working closely with the charity sector.

Following the high profile and successful Save Our Cheque campaign, driven by the IoF during 2011, the Payments Council withdrew its scheduled deadline for the abolition of cheques in 2018.

“The announcement was greeted with great relief across the charity sector,” says Louise Richards, Director of Policy and Campaigns at the Institute of Fundraising. “We have been assured cheques will continue as long as there is a need for them but there is also a sense of uncertainty as to what is to come and so we cannot afford to rest on our laurels.

“Our research shows that many charities are heavily reliant on cheques in their fundraising, with some stating 75% – 90% of their total income is received in this way.  We aim to ensure that charities and their needs are recognised in the management of the cheque going forward and in the development of future giving methods.”

Scott Gray, Managing Director of Rapidata Services Plc says, “11million cheques were used each day in 1990 compared to just 3.5million per day in 2009.  Cheque usage continues to fall, most recently by 10% per year.  It’s important we acknowledge this natural decline and that consequently cheques are unlikely to remain a viable payment mechanism for ever. Charities cannot afford to be complacent in their fundraising strategies for the future. As a sector, we need to be prepared for change and have a voice in how this takes shape.”

Cheques: Where Now? key objectives:

• To ensure the cheque remains a viable donation payment option for as long as possible
• To determine how the charity sector can prepare for the eventual demise of the cheque as a donation/payment method
• To explore viable existing and new alternative payment mechanisms and how these can be developed with fundraising in mind
• To build awareness and motivate charities in the need to be proactive in their move away from reliance on cheques, and how to act on this
• To explore how charities may engage with their donors/audiences on this issue.

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Payments Council – ensure your systems are up to date

Payments Council takes action to support businesses and charities who accept Direct Debits or make Direct Credit payments

Last month Payments Council contacted more than 50,000 UK businesses and charities to notify them, that from 1st January 2012, they need to make sure whatever system they use to check a new customer’s sort code is correct and is updated at least monthly, preferably weekly.  By doing this they will be best protecting their business or charity from the risk of an automated payment failing.

This important change has come about because new sort codes are being issued far more frequently as more new financial institutions and products emerge. Out-of-date sort code reference information could result in a new customer’s sort code being wrongly rejected, leading to customer complaints and potentially lost business or donations.

Businesses and charities usually check sort codes using a reference information database, which is likely to be updated in downloads from the organisation’s payment solutions supplier. Customers, supporters or suppliers provide their bank account number and six digit sort code if they want to pay by Direct Debit or be paid by Bacs Direct Credit.

Hilary Plattern, Director of Strategy, Payments Council says:
“Whether you are a satellite TV supplier or a small charity, if you accept automated payments from customers it is critical that the system you use to check a new customer’s sort code is correct and is kept bang up-to-date. If it isn’t and a sort code is wrongly rejected, a customer’s patience can be tested and their business can quickly be lost.  This is why we are trying to make contact with every business and charity who could be impacted.

“Anyone wanting to find out more can contact their bank, commercial provider or alternatively VocaLink if they purchase the Industry Sort Code Directory direct from them.”

The Payments Council is also reminding businesses and charities that front-line staff in call centres and their websites all need access to, and need to be using, up-to-date sort code reference data.

As part of this change Bacs Payment Scheme Rules will require businesses and charities – that are payment originators – to ensure that their Bacstel-IP related software and other payments-related databases and applications are up-dated with fresh sort code data at least monthly.  Previously the requirement was at least quarterly.

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Payments Council to keep cheques and cancels 2018 target

The Payments Council announced on 12th July 2011 that cheques will continue for as long as customers need them and the target for possible closure of the cheque clearing in 2018 has been cancelled. The Payments Council Board will continue to focus on security, efficiency and encouraging innovation in all types of payments to ensure customers have options best suited to the 21st century.

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