Overlay services are key to the business case

Overlay services can be defined as any payment service that connects to a clearing and settlement infrastructure and in most cases add greater functionality for users. These services are likely to be tailored to particular contexts and/or types of customers. Digital technology, such as mobile, phablets and tablets, provide great tools to access payments services with the propensity to provide greater functionality than current access mechanisms. The UK experience suggests that it has taken years to develop and deploy new services that use the Faster Payments Service. Within the UK, the majority of the real-time traffic has been orientated towards:

I. Consumer-initiated payment

person-to-person, credit card repayments, last-minute bill payments, catalogue/mail order and transfers to savings accounts.

II. Business-initiated

payment of wages, state benefits, top-up of virtual accounts and from large businesses. It is the business-initiated payments that have generated income for banks in the UK.

In the coming years this profile will change as digital payments initiation services become widespread. We are beginning to see this in the UK, for example with Barclays’ PingIt and Buyit propositions, the Payments Council’s Mobile Payments Service Paym and, later this year Zapp, which are orientated towards the person-to-person, person-to-small business and person-to-business markets. Zapp will enable a wider community of banks to be able to provide a differentiated payment service through their bank app, including consumer payments to sole traders and small businesses, e-Commerce and m-Commerce.

Overlay services have the potential to generate revenues for banks and can provide enhanced value propositions when packaged up with coordinated information. A good example is that of the car sales process – a seller can receive payment while the buyer is present, and the buyer could do all the necessary checks, transfer ownership and purchase insurance at the same time. The potential to provide enhanced and convenient propositions for consumers, SMEs and corporates are endless – if the underlying real-time infrastructure and the payment initiation mechanisms are synchronised across the industry. In our experience, a practitioner-based solution helps communities adopt real-time and take advantage of the benefits of the infrastructure.

Government statistics