The UK’s new Payment System Regulator has just published its policy statement and it contains references to Account Number Portability. I hope they go down the sensible path of virtual account numbers and “paynames” because, as I’ve been banging on about for years, bank account numbers and mobile phone numbers are not the same thing.
The Economic Secretary to the Treasury, Andrea Leadsom, has been consistent in calling for bank account portability as a way to do something about increasing competition.
Wouldn’t it be great if you could change your bank account from one bank to another at the touch of a button? So if you were fed up with the service your bank was providing or you wanted to take advantage of a great offer at another bank you would be able to switch without having to worry about changing all your direct debits, standing orders, cheque books, cards, account number etc.
Ever since I was first elected I have been campaigning to ensure customers can change their bank accounts as easily as a customer can change their mobile phone provider.
I asked Andrea about this when she was kind enough to drop in to techUK recently. With my chair-of-the-payments-group hat on, I thanked her for her plain speaking on the waste of money that was the Current Account Switching System (CASS) and enquired as to why account switching was still below it’s peak. I’m paraphrasing greatly, but she said that in essence it wasn’t worth switching because the banks are all the same. Other people have made the same point.
Customers may also not be able to make meaningful (to them) distinctions between financial services brands
However, there is a strand of thinking that says that switching might be reinvigorated through a solution with no impact on employers, utilities, friends, charities and so, and that is Account Number Portability (ANP) for UK banks. I notice that ANP has shown up in the new UK Financial Conduct Authority’s Payment System Regulator’s policy statement “A new regulatory framework for payment systems in the UK” (March 2015). The regulator says it will look at “current developments and innovations in the sector such as Account Number Portability”. Personally, I don’t think it’s a current development (there are no plans even for plans for ANP), but it could be an innovation to make Andrea proud. But how?
Well, as I mentioned to Andrea at techUK (I was the nutter at back who kept going on about “7-0” solutions, Angela) the best way to do this is with virtual account numbers (VANs) and virtual payment names (“paynames”). What’s more, an odd quirk of British numbering systems suggests a fun way to do this.
All mobile phone numbers in the UK begin with a “7”. Well, what if all VANs in the UK began with “70”? How cool would this be? The two main portable numbers that a consumer needs would both begin with a “7”.
I made this point in public three years ago when I was explaining why the Current Account Switching Service (CASS) would be a waste of money. I said at the time
In the general case, payers should enter the payee’s “Pay Name” (e.g., £dgwbirch or £chip.com or £donations@oxfam or whatever) rather than a mobile phone number…
[From E-ASS about face]
Square have just introduced the “cashtag”, which is basically this idea except doing something about it rather than just blogging about it. I’ve already bagged my cashtag. It is, as you might expect, $dgwbirch. The idea of the cashtag is so good and so obvious, even at the time of CASS planning, that, as my good friend Carol Benson observed… why isn’t my bank doing this?
Well, why indeed? I have no idea why they set about building CASS instead of developing the VAN idea, because it’s obviously a better use of industry money and a more effective long-term solution. The cashtag shows just where the VAN could go in terms of consumer convenience. I’ve been testing mine by inviting people to send money to the Dave Birch Holiday Home in the South of France Emergency Appeal Fund and so far I’ve got $4. So I can tell you unequivocally that it works, and that it is better than giving out bank account name, bank account number and bank sort code. And, of course, it’s portable. Right now it’s linked to my Simple account, but I can change it at any time to link to a different account.
Incidentally, I even explained how to fund the scheme, something I hope that the PSR’s management consultants will find when googling around for ideas in the coming months.
The Payments Council should sell vanity Pay Names to fund the development of the system and to keep it free to users. I’m sure some far eastern oligarch will cheerfully stump up a million or two to own £007 and I’m sure that even in these straightened times the forward-thinking finance director of Consult Hyperion could be persuaded to spend a few quid on £chyp.com and so on.
[From E-ASS about face]
So there you go, PSR, sorted. One less thing for your team to deal with. I’ll ask the team down at CHYP End to deal with your “Identity Assurance” thing next…