reviously I discussed Request to Pay being the killer use case that Open Banking was looking for. However you might have thought "Request to Pay services in the form of pay by link have been around for a while, so what’s new?"
What I mean by “Pay by Link” are services that work by generating a payment link from the biller. This payment link is then sent to the payer usually by text message or e-mail. The payer then clicks on this link which generates a checkout page where the payer can pay using the payment method offered by the biller and their payment service provider. Pretty straight forward right? So why has it not taken over the world? Well it is not without issues, issues which have been solved by Pay.UK in the creation of the Request to Pay standard.
- Fire and forget
So Pay by Link creates a very binary relationship. As a business you send a link out and the customer can either pay it or not. If the customer doesn’t pay, why is that? Have they received the message? Do they dispute the invoice? You can send more messages perhaps using red font but without understanding the reason for not being paid you’re not improving your chances of being paid which may end up in credit control which is expensive for businesses and upsets customers.
Contrast this with our Request to Pay service where the communication is two way, the customer can choose how they respond to the request. Of course they can pay in full but they can also ask for more information, part pay or request an extension in due date. This creates a narrative between the biller and the payer to improve payment for both parties.
Unfortunately in the world we live in, clicking a link in an email asking you for money is not a sensible thing to do and banks have been trying very hard to coach us not to click on these links. This is because the average payer will not be able to distinguish between a valid payment link from a business they know to a fraudulent Pay by Link made to look like a business they’re familiar with. A worst case scenario would perhaps see the payer click on the fraudulent link and pay using Open Banking, where there is very little customer protection such as the ability to chargeback as you have in the card world.
One of my favourite books on digital banking is “Why banking is no longer somewhere you go, but something you do“ by Brett King. The same could be applied to Request to Pay “Why bill payment is no longer somewhere you go, but something you do”. The reason for this is the payer is in control of the payment experience. The payer, using their personal banking app or personal finance manager, retrieves any Request to Pay messages a biller has sent them. All within their known environment, they’re not sent to a checkout page of unknown provenance.
- Payment choice
Linked very closely to the above point is the choice of how to pay. With a Pay by Link service the available payment options are controlled by the biller and their PSP. That is because when a payer clicks on a non-fraudulent link they are presented with the checkout page of the biller who will have chosen which payment options their customer should see. As a payer that doesn’t give you a lot of control.
In the Request to Pay alternative as the payer is retrieving all their payment requests into their chosen app they have full control over how they want to pay. If they aren’t happy with the options in their current app they can simply move apps and retrieve the messages into their new app. This means the scope of payment options could be huge, I could very easily see for example cash based payment from the likes of Paypoint or Paysafe Cash being an option as well as cards and the killer Open Banking use case. Either way the customer is in full control whilst the biller gets a digital payment acknowledgement to facilitate their reconciliation process.