Latest / The Payments Shed / Ep. 53 - From Regulation to Revenue with TrueLayer: How Policy, VRPs & Pay by Bank Are Reshaping UK Payments

Transcript

Ep. 53 - From Regulation to Revenue with TrueLayer: How Policy, VRPs & Pay by Bank Are Reshaping UK Payments · The Payments Shed

• 0:00
  Welcome to the Payment Shed Podcast, the weekly podcast that
• 0:03
  dives into the big topics, trends and people shaping the
• 0:06
  world's of payments, fintech and business leadership with your
• 0:09
  two Co hosts, myself, Grant Evans and Justin Hannah.
• 0:13
  Welcome to another episode of the Payment Shed Podcast.
• 0:15
  Today we are joined by Nadia Bennett, strategic accounts
• 0:18
  director, and Megan Coulson, UK public policy lead at True
• 0:22
  Layer. Guys, welcome to the show.
• 0:23
  Thanks for joining us. Thanks for having us.
• 0:26
  Yes, thanks for having us. Can you both tell us a little
• 0:28
  bit about your careers in Fintech and payments today and
• 0:31
  what kind of led you to to taking roles at Trulayer?
• 0:33
  Nigel, if we start with yourself, sure.
• 0:36
  I've been working in the payment industry since about 2008,
• 0:41
  worked for a number of acquirers gateways like Global Payments
• 0:46
  and Barclaycard and CyberSource, and then I joined Trulayer about
• 0:51
  3 1/2 years ago to take on the good fight for open banking.
• 0:55
  What about you? My journey's a little bit
• 0:59
  different. So I work in the policy team at
• 1:01
  at True Layer. So I've always had a background
• 1:03
  in working in public policy, originally for the Confederation
• 1:07
  of British Industry. So looking sort of cross
• 1:09
  economy, cross industry and some time in Brussels in London,
• 1:14
  which sparked my initial interest in financial services
• 1:16
  policy and then moved over to the regulator.
• 1:18
  The SCA has spent some time there in their public affairs
• 1:21
  team, so working with senior members of the FCA to understand
• 1:24
  how the broader political environment impacts them as a
• 1:26
  regulator, which was very fascinating, and then changed
• 1:30
  working environment completely and came over to True Layer to
• 1:32
  join the policy team. Open Banking is an interesting
• 1:35
  one because there's sort of that you're right at the intersection
• 1:38
  of sort of broader policy regulation, seeing how the
• 1:41
  tech's evolving. So that was what sort of piqued
• 1:43
  my interest. And yeah, I've been at True
• 1:45
  Layer for coming up two years now.
• 1:47
  Nice. And from a policy perspective,
• 1:50
  what problem was open banking really meant to solve kind of in
• 1:54
  the UK? Yeah, it's a, it's a really good
• 1:56
  question. If you could sort of cast your
• 1:58
  minds back to the origins of open banking and I think looking
• 2:03
  at the UK specifically, it started off as sort of the CMA
• 2:06
  looking into whether there was a lack of competition specifically
• 2:10
  in the retail banking sector. This is off the back of the
• 2:13
  financial crisis where number of sort of banks collapsed and that
• 2:17
  concentration risk increased even more.
• 2:19
  So the CMA looked into that. They discovered that, yes, there
• 2:23
  was a lack of competition there and there were a number of
• 2:24
  remedies that were introduced off the back of that.
• 2:27
  That led to the establishment of the Open Banking implementation
• 2:31
  entity, which is now Open Banking Limited, which was
• 2:34
  tasked with kind of putting those remedies into practice.
• 2:37
  And all of that was around originally for consumers being
• 2:40
  able to shop around a bit easier to see if they were getting the
• 2:42
  best deal with their retail bank.
• 2:44
  The UK was quite unique in the sense that at the same time of
• 2:47
  all of that going on, we had PST 2 coming into effect.
• 2:51
  This obviously of course was when the UK was still part of
• 2:53
  the European Union, so European law applied to us.
• 2:55
  So we had the confluence of both the CMA order coming in, but
• 2:58
  then also PST 2 which had some really clear objectives in terms
• 3:02
  of injecting competition, driving innovation in payments.
• 3:06
  And I think it was probably that sort of those two happening at
• 3:10
  the same time, which allowed really smart people, our Co
• 3:13
  founders at true level were included to realize that there
• 3:16
  was a way through sort of these APIs that were being introduced
• 3:20
  so that consumers could access their payments and data data a
• 3:24
  lot better. That they were actually able to
• 3:27
  come in and provide a solution to allow payments to move from
• 3:30
  an account to account without the need for a card essentially.
• 3:34
  So open banking was always sort of introduced to inject more
• 3:37
  competition into the system, originally for retail banking,
• 3:40
  but you kind of got a Brucey bonus there in the sense that,
• 3:44
  yeah, you're able to leverage it in a way that meant that you
• 3:47
  could facilitate payments without cards.
• 3:49
  And so I think that's led to a really flourishing and
• 3:51
  innovative open banking ecosystem that is worth well in
• 3:55
  excess of 4 billion today. So yeah, all rooted in sort of
• 3:59
  injecting more competition. And do you think that policy
• 4:02
  makers maybe when we're talking about the payments industry or
• 4:05
  the initial stages of open banking, they, they may be
• 4:07
  understood, misunderstood the sector and do you think that
• 4:10
  that's started to change recently?
• 4:13
  I think the sector's evolved massively in, in fairness to the
• 4:16
  regulators. And I think as I said, it wasn't
• 4:19
  originally introduced, particularly the CMA order stuff
• 4:22
  with a payment lens applied to it.
• 4:24
  And since then I think we've seen offshoots of lots of
• 4:27
  different regulatory initiatives where they be LED from central
• 4:30
  government, from the FCA, the PSR.
• 4:32
  And I think what was probably lacking was that overarching
• 4:35
  vision, that North star of our, all of these initiatives rowing
• 4:38
  in the same direction in terms of the sort of payments
• 4:41
  ecosystem that we want to create in the UK.
• 4:43
  And I think we do now have that in the UK, specifically through
• 4:47
  the National Payments Vision, which the government published
• 4:49
  in late 2024. And I think what that has able
• 4:53
  to sort of enable is regulators to really look and see is what
• 4:59
  we're pursuing is what we're prioritising delivering and what
• 5:02
  we want the MPV to achieve. So in the context of account to
• 5:06
  account, it's to enable seamless and ubiquitous account to
• 5:09
  account payments powered by open banking.
• 5:11
  That gives us a really clear outcome of what we're looking to
• 5:14
  do. I think maybe that's what was
• 5:16
  missing initially that is kind of giving us a bit of the secret
• 5:18
  sauce that we're seeing more in action today.
• 5:22
  And for the commercial side, when do you kind of feel that
• 5:25
  policy started working with innovation instead of kind of
• 5:28
  against it? I think the North Star that
• 5:32
  Megan mentioned is really important and we've seen in the
• 5:35
  past regulation where maybe that North star was missing.
• 5:39
  To give you an example of where it quite didn't work for, for
• 5:42
  innovation is the interchange fee regulation of 2015, where I
• 5:46
  think ultimately the regulator thought they could be helping
• 5:50
  merchants pass on savings on interchange to consumer.
• 5:55
  And sure, you know, acquire us with a big SME book had great
• 5:59
  savings, merchants that were on interchange plus had great
• 6:02
  savings, but ultimately it didn't benefit the consumer.
• 6:05
  It did quite the opposite because the banks were squeezed
• 6:09
  on interchange fee revenue, it stifled their innovation and
• 6:13
  they couldn't give consumers long interest free periods.
• 6:17
  They couldn't give them cash back rewards, perks, whatever.
• 6:20
  So that's where things went a bit wrong.
• 6:23
  PSD 2, at least the open banking side of PSD 2 was kind of, let's
• 6:28
  say legitimizing innovation that was already happening in Europe
• 6:32
  anyway and therefore created that breeding ground for true
• 6:37
  innovation that actually benefits the consumer.
• 6:40
  Like initially maybe a little bit more on the data side,
• 6:43
  access to their accounts, present finance management, you
• 6:46
  know, more chance of getting a bigger loan and now as we're
• 6:49
  moving more into payments. So that's, you know, in summary
• 6:53
  where innovation was driven by regulation.
• 6:57
  So let's talk about the big one, shall we?
• 7:01
  Variable recurring payments. VRPS feel like it's quite a
• 7:04
  topical conversation given some of the the stuff that's been
• 7:06
  going on recently. Megan, from your point of view
• 7:09
  and just to clarify for our listeners, anyone's confused,
• 7:11
  what are VRPS and why do they matter?
• 7:15
  OK, yeah, let's let's break it down really simply.
• 7:17
  So as you said, VRP stands for variable recurring payments, so
• 7:21
  the V variable. This means that the payment
• 7:24
  amount or frequency can change recurring.
• 7:28
  This means that you only need to authorize that payment mandate
• 7:31
  once and actually multiple payments can occur.
• 7:34
  The P is for payments. If your listeners don't know
• 7:36
  what a payment is, and I'm not sure they should be to the POD
• 7:39
  cards, it's worth saying that VR PS do actually already exist
• 7:43
  today. They were part of the the
• 7:45
  original CMA order, but they can only be used for quite a limited
• 7:48
  set of use cases. These you might have sort of
• 7:51
  seen these referred to as sweeping use cases.
• 7:53
  So I can set up variable recurring payments, but only
• 7:57
  between two accounts that I own. So they're also sometimes
• 7:59
  referred to as me to me payments.
• 8:02
  What's getting a lot of airtime at the moment is CVRP, so
• 8:06
  commercial variable recurring payments.
• 8:08
  The commercial aspect of that means that we as their party
• 8:12
  providers will need to pay the banks to be able to access that
• 8:16
  APICVRP functionality. In terms of sort of how those
• 8:21
  use cases are being introduced to the market.
• 8:24
  The ones that are closest to going live are what we call wave
• 8:28
  one use cases, sort of think of those as a more modern
• 8:32
  alternative to direct debit. So it can power things like
• 8:35
  utility bills, payments to regulated financial services
• 8:39
  companies, E money institutions, government payments, rail
• 8:43
  tickets, all of that kind of bucket what what is seemingly
• 8:45
  lower risk payment activity. The second wave that will that
• 8:49
  will come hopefully in 2027 will be unlocking variable recurring
• 8:54
  payments in the e-commerce space.
• 8:56
  And what that means is that we'll be able to offer an
• 8:58
  alternative to card on file. We'll be able to do bank on
• 9:01
  file. So that means as a consumer,
• 9:02
  just as you can save your card on file to enable things like a
• 9:05
  one click checkout, you'll be able to save your bank account
• 9:09
  on file as well. Which then means that in every
• 9:13
  way that a consumer can currently use their card online,
• 9:17
  they'll also be able to use pay by bank functionality as well.
• 9:20
  The reason it's important is I guess for for banks, they're
• 9:24
  going to start seeing a commercial return on their open
• 9:27
  banking payments, which is something that hasn't happened
• 9:30
  to date. I think obviously of the fact
• 9:32
  that it was born as a regulatory initiative, that access was
• 9:35
  free, and I think that was the right decision at the time.
• 9:37
  But the ecosystem has evolved quite a lot since then.
• 9:40
  For merchants, you know, it's it's a much smarter, more modern
• 9:44
  recurring payment functionality. You don't need to worry about
• 9:47
  things, for example, with a subscription, the card details
• 9:50
  expiring for consumers, it will enable Pay by Bank to feel like
• 9:56
  a much slicker experience through things like one click
• 9:58
  check out. And I guess the reason all of it
• 10:02
  matters is that the ways Pay by Bank traditionally have been
• 10:04
  able to be used have been limited.
• 10:06
  So it's the way that we level up the functionality of Pay by Bank
• 10:09
  so that it can offer that fully ubiquitous and seamless payment
• 10:13
  method that consumers expect. Has it been an absolutely
• 10:16
  monumental regulatory process to get it to this point?
• 10:20
  And is there still like a final Sprint you talk about 2027 like
• 10:23
  feels like there's still a a couple more hurdles to jump over
• 10:25
  to get it to that full market readiness.
• 10:27
  There are and I think regulators always had the intention of
• 10:31
  moving beyond sweeping. So I think there's probably been
• 10:34
  a lot of debate since then on the best way to do it.
• 10:36
  So originally sort of the the wave one use cases that I
• 10:40
  mentioned that was envisaged to be a pilot originally that the
• 10:44
  PSR were going to coordinate and lead and actually it was sort of
• 10:48
  determined, well, is this the best route to doing it?
• 10:50
  How does that interact with a commercial element?
• 10:53
  And so there's been a lot of conversations and coordination
• 10:57
  and collaboration behind the scenes between regulators,
• 11:00
  banks, TPPS to kind of get us to this stage.
• 11:04
  And I think where it's different from previous iterations of
• 11:07
  trying to get VRP off the ground is that we do now have 31
• 11:11
  funders mixed of banks, fintechs, TPPS coming together
• 11:15
  to build a commercial operator that will actually run a scheme
• 11:19
  for CVRPI. Don't think we can underestimate
• 11:23
  the role of the regulator in all of this.
• 11:25
  Sort of it's not regulatory driven in that sense that, you
• 11:28
  know, similar to the CMA to say you are mandated to do this.
• 11:31
  It is voluntary for banks and TPPS to opt in.
• 11:34
  But I do think the SCA has set a very clear expectation of
• 11:37
  industry and I think increasingly are seeing their
• 11:39
  role more as a referee to make sure pockets of industry are
• 11:44
  keeping up with the momentum, making sure things are delivered
• 11:47
  on time and in the right way. Now from a merchant perspective,
• 11:51
  so I speak to a lot of merchants that have been sold VR PS,
• 11:55
  right? Where does it outperform cards?
• 11:58
  Kind of what's what's the ideal blue sky scenario?
• 12:01
  If we look at VR PS, I think we should look more at sweeping VR
• 12:05
  PS to start with because there we have real data where As for
• 12:09
  for commercial VR PS, the scale data isn't there yet, but should
• 12:14
  be soon with wave 1 launching and then wave 2 later this year
• 12:17
  or early next year. For us VR PS are very real.
• 12:20
  We have about 4 million successful ones on a monthly
• 12:23
  basis. And in the past obviously cards
• 12:26
  have been just convenient. They are.
• 12:28
  They have the Remember Me function.
• 12:29
  They're higher cost, higher fraud and there is a bigger risk
• 12:36
  of churn. What VR PS bring to the table is
• 12:39
  the exact opposite. Lower fraud, lower cost, a lower
• 12:43
  operational overhead and and consequently also lower churn.
• 12:48
  And that's a, it's a big problem, particularly for
• 12:51
  merchants that have a subscription model where, you
• 12:56
  know, account updated doesn't work for everybody.
• 12:58
  Network tokens haven't been rolled out widely yet.
• 13:01
  So that's where the real opportunity is.
• 13:04
  And talking about commercial VR. PS When, when they are ready at
• 13:09
  scale, do you see any threats to them exploding overnight?
• 13:14
  One of the things I've talked about previously is legacy
• 13:16
  systems and how you can potentially incorporate
• 13:19
  something which is ultimately very slick.
• 13:21
  It's a brand new product, but the you have maybe friction
• 13:23
  points for bank readiness, merchant education, legacy
• 13:26
  systems, Rick's appetite, whatever it might be.
• 13:28
  Like what do you guys kind of point out as, OK, these are the
• 13:32
  things that can maybe sow adoption when it is fully ready?
• 13:35
  Well, I think all of these bits play a part of the reason why
• 13:39
  that hasn't exploded yet. I would say there's also an
• 13:43
  element of the perfection is the enemy of good and it's a case of
• 13:49
  just getting started to get it done.
• 13:51
  I think if we historically look at other payment method methods
• 13:54
  launching, like you look at the 60s and direct debits, they
• 13:57
  weren't perfect when they launched.
• 13:58
  There was no indemnity guarantee.
• 14:00
  Not all the banks participated. You look at contactless, well
• 14:04
  that was 10 lbs limit at the start.
• 14:07
  It was only on Barclaycard issued cards or Barclays issued
• 14:11
  card and Barclays terminals. Apple Pay didn't have all the
• 14:14
  banks when they launched. But it's just about getting it
• 14:16
  out there and iterating from there and then the scale will
• 14:20
  come. But we just have to take the
• 14:21
  leap and get on with it. And Megan, do do you think the
• 14:25
  UK is generally ahead globally when it comes to Erps or kind of
• 14:29
  is the narrative overplayed a little bit?
• 14:32
  I think the way that we're building it now in terms of, you
• 14:37
  know, as I mentioned earlier, those 31 firms coming together
• 14:40
  to establish the UK payments initiative, I do think that's a
• 14:43
  really novel way of doing it. And something that, you know,
• 14:46
  the UK hopefully can look back on as a successful case study of
• 14:50
  how you can get industry incentives alive aligned to
• 14:53
  bring innovation to the market. But we definitely shouldn't rest
• 14:57
  on our laurels. I think the UK has always had
• 15:00
  that competitive edge when it comes to open banking because of
• 15:03
  the CMA and PST two kind of happening at the same time.
• 15:07
  But other countries are looking at this.
• 15:08
  We know Germany is looking to expand into dynamic recurring
• 15:12
  payments DRP, I won't break down that one.
• 15:14
  I think that's sort of fairly obvious.
• 15:17
  But you know other territories are are quickly looking to
• 15:20
  replicate and build upon what the UK has done.
• 15:23
  So I think it's really important that as Nadia said that we just
• 15:28
  kind of get the job done. Otherwise, I think there is a
• 15:31
  real risk that we lose a lot of the ground that we've we've
• 15:34
  built on to date. In today's episode is sponsored
• 15:37
  by ISX Financial. Most growing businesses end up
• 15:40
  stitching together multiple providers to run their payments
• 15:43
  and banking, leaving them exposed to cash flow,
• 15:45
  reconciliation and even security issues.
• 15:48
  ISX Financial delivers a unified ecosystem with multi currency
• 15:51
  accounts, online payments, real time UK and EU transfers and
• 15:55
  global mass payout. Within that platform, Paid By
• 15:58
  provides pay by bank with real time settlement notifications,
• 16:01
  automated reconciliation and integrated refund management.
• 16:05
  One partner, one integration, helping your business transact
• 16:09
  with confidence. You can learn more at ISX dot
• 16:12
  financial. That's ISX dot Financial and a
• 16:15
  big thank you to the team at ISX for supporting the show.
• 16:20
  And I think one of the interesting things having true
• 16:23
  layer with us today is talking about some of the adoption.
• 16:25
  You guys have obviously been around for a for a while now.
• 16:28
  So now I wanted to talk about verticals where you've seen the
• 16:31
  highest breakout growth on pay by bank and also VRP for a
• 16:35
  sweeping perspective as well. Yeah, I think as is the nature
• 16:40
  of any new payment method, it's not like the large merchants
• 16:43
  come screaming, oh, definitely want this in my checkout.
• 16:45
  You tend to start in verticals that are a little bit more open
• 16:49
  to risk taking that maybe have a little bit of a harder time
• 16:51
  finding a, a like commercially viable card acquirer to work
• 16:57
  with. And so we've had great success
• 17:00
  in financial services space and I gaming where we've reached a
• 17:04
  stage where merchants don't even think about whether they should
• 17:09
  have this or not. It's a must have in the payment
• 17:13
  selection for consumers and in some cases they've even disabled
• 17:17
  cards, particularly in financial services for sweeping like some
• 17:22
  of the neo banks using it. It's a it's a no brainer.
• 17:27
  We're now obviously seeing a little bit more adoption in
• 17:29
  e-commerce, which is great to see.
• 17:31
  It's been a long time coming, but it's just the nature of the
• 17:34
  beast. Things take a while to go to
• 17:38
  come to life with, with merchants that a little bit more
• 17:41
  mainstream. What we're also seeing now is an
• 17:44
  element of FOMO and jolting other merchants into action.
• 17:49
  There's obviously the call of sovereignty and redundancy that
• 17:54
  is getting louder and louder, where the UK as being one of the
• 17:58
  few markets where there's no local account to account.
• 18:01
  Hero merchants are really seeking alternatives that aren't
• 18:08
  cut Basin if we're honest, any e-commerce payment method in the
• 18:12
  UK for instant purchases is a card or a card in disguise.
• 18:18
  And so bringing pay by bank to, to e-commerce and, and
• 18:24
  mainstream merchants and then hopefully soon, you know, in
• 18:28
  wave two bank on file, that is where we're moving towards.
• 18:33
  Can see a point there kind of you spoke before about the pros
• 18:36
  of of open banking versus cards, but also the how they can sit
• 18:40
  alongside cards. So when you're speaking to CF
• 18:43
  OS, yes, there's cost reduction, conversion, fraud, cash flow.
• 18:47
  When you're speaking to this business, are they aware before
• 18:50
  you speak to some of the of the benefits of open banking?
• 18:57
  I think CF OS generally probably care about all the things that
• 19:00
  that you mentioned there, but generally also they care about
• 19:03
  commercial viability. And I think open banking in the
• 19:09
  past hasn't done itself any favours by saying it's, I don't
• 19:12
  know, 80% cheaper than cards because the reality is for
• 19:15
  really, really large merchants that is not the case.
• 19:19
  And So what CF OS and the merchants we speak with care
• 19:24
  about though, it's they know this isn't a charity project.
• 19:28
  It has to be sustainable and commercially viable for
• 19:31
  everybody that is in that is part of the chain.
• 19:34
  And for them that means the cost of the payment, it means lower
• 19:38
  fraud. But it obviously also is quite
• 19:40
  attractive that they can have instant settlement that gives
• 19:43
  them better cash flow, cash flow.
• 19:46
  So it's about translating this now into something that they can
• 19:51
  understand like the higher conversion for some merchants
• 19:55
  can bring more revenue. It can be used as a fall back
• 19:59
  methods if cards don't cards don't work.
• 20:01
  And I think we have to remember, like very often.
• 20:05
  I, I personally speak to very, very large merchants who have an
• 20:08
  army of payment people that work for them that can trigger all
• 20:11
  the SCA exemptions and so on and so forth.
• 20:13
  And the conversion is amazing. But the vast majority of
• 20:16
  merchants don't have that luxury.
• 20:18
  They really struggled after like the downside of PSD 2, let's say
• 20:22
  the SCA implementation on cards really dumped some of the, the
• 20:28
  card conversion. And so they are quite happy to
• 20:30
  see that they can get a payment method here that matches card
• 20:33
  conversion at a lower cost. And Megan, do you think that
• 20:37
  policy makers are talking enough about merchant incentives or are
• 20:40
  they still too focused on the banking outcomes that that come
• 20:43
  from open banking? I think it's definitely shifted
• 20:48
  and I think that awareness that there are very clear benefits to
• 20:52
  merchants off the back of this has really sunk in across the
• 20:57
  regulatory piece. And you know, there's been a lot
• 21:00
  of retail trade associations, individual merchants, retailers
• 21:04
  that have long said we need more competition, proper competition
• 21:09
  amongst our payment methods to you know, create that downward
• 21:13
  pressure on the card schemes. That's a result of what healthy
• 21:16
  functioning competitive market. Ultimately that's what it should
• 21:20
  should look like. But I, I do think regulators are
• 21:24
  waking up to that. So to to think about some
• 21:26
  examples, the Bank of England are leading this huge project
• 21:30
  that is looking to update and renew our underlying retail
• 21:34
  payments infrastructure. As part of that, they've got a
• 21:37
  board of, of different experts across the payments ecosystem
• 21:41
  that's going to help with some of those design choices, some of
• 21:43
  the end user outcomes that we want to be building.
• 21:47
  And on that you see retailers sitting there setting up end
• 21:50
  user forums where they want to go and speak to merchants
• 21:53
  directly. And I think there has been this
• 21:56
  shift where merchants are actively driving the
• 21:59
  conversation around what they want from their payment methods
• 22:03
  and, and what are some of the outcomes that they want to see
• 22:05
  changing them sort of from being, I guess a passive
• 22:09
  receiver of whatever the regulator's decided was a
• 22:11
  priority in the payment space through to them actually
• 22:14
  deciding what that agenda and, and, and shaping how that agenda
• 22:17
  is, is played out. So I think there's definitely a
• 22:19
  positive trajectory there. And I think we're also seeing a
• 22:23
  lot more advocacy directly from merchants as well.
• 22:27
  So you know them going in and speaking to the policymakers
• 22:31
  that are going to make these decisions on the future of our
• 22:33
  payment system. So I think it's a really good
• 22:35
  thing to see because it's going to make sure that there's a
• 22:37
  proper diversity of views taken into account when some of these
• 22:40
  long lasting decisions are are made.
• 22:43
  Jim, so you mentioned there is a duopoly right in in payments
• 22:47
  right now. Do you think we'll ever reach a
• 22:49
  point where pay by bank becomes the default as a personal
• 22:52
  alternative? I assume that's probably the
• 22:54
  dream of the true later team. Yeah.
• 22:56
  Well, yeah. Otherwise, what are we doing
• 22:59
  right? No, of, of of course, we, we, we
• 23:03
  think that's a, a credible and worthwhile objective pursuing.
• 23:07
  And now you already said that we do see in some verticals that
• 23:10
  pay by bank is the default. Like I can't imagine paying off
• 23:13
  my credit card now any other way than via open banking.
• 23:17
  That would just seem like a really clunky experience and
• 23:19
  something that I wouldn't want to do.
• 23:21
  And I think as we do crack into more verticals, e-commerce being
• 23:25
  one of them, the draw of some of these innovative features that
• 23:28
  we're building on top. So, for example, instant refunds
• 23:30
  that we're able to give consumers.
• 23:33
  We had a colleague recently that needed to get a, a refund off of
• 23:37
  Amazon and, you know, went through Pay by Bank very loyally
• 23:40
  as they should. And before the refund
• 23:43
  confirmation had even landed in their e-mail inbox to say, yeah,
• 23:46
  your refund is confirmed, the money was back in their account.
• 23:48
  So consumers that are sort of wanting that instantness more
• 23:51
  and more, I think the, the draw of that stuff is, is going to
• 23:55
  make Pay by Bank increasingly the default.
• 23:57
  But Nigel, I don't know if you've got views on that as
• 23:59
  well. Yeah, I think, I don't think it
• 24:03
  has to be one or the other, right.
• 24:04
  It's what what is key is optionality for consumers and
• 24:08
  there isn't enough optionality in the UK compared to some of
• 24:11
  the other markets that we operate in and redundancy for
• 24:15
  merchants, right. The the call, the calls are
• 24:17
  getting louder and louder. There are obviously, you know,
• 24:20
  the card schemes or or a card acquires don't fall over every
• 24:24
  other week, but it does happen. And we've had cases where you
• 24:28
  know, certain don't call out anybody specifically, but like
• 24:32
  payment methods or providers went down and the merchants that
• 24:36
  were working with us were happy to have us in there as an
• 24:39
  alternative in the UK because there is not much choice.
• 24:42
  And if you think of the payment methods that there are there's
• 24:45
  cards, OK, then you've got Apple Pay, Google Pay, well that's a
• 24:48
  card. Then you've got PayPal, well,
• 24:50
  that's usually fed by card and then you've got I now pay later.
• 24:54
  Oh, well, that's paid off with a card.
• 24:56
  So what is there like? And, and I think like we were
• 25:01
  already alluding to, it's just not us banging the drama, right?
• 25:05
  It's in the national payment vision that is supported by the
• 25:08
  Treasury and pushed by the regulator.
• 25:10
  And this isn't just the UK. The National payment strategy of
• 25:13
  Ireland says the same that you will have all seen the, the, the
• 25:19
  recent movement on, on the old LinkedIn for sovereignty and
• 25:24
  what's happening in the EU just calling for alternatives that
• 25:29
  work everywhere. And you know, there is one that
• 25:32
  already works everywhere across the countries where you have
• 25:36
  broad coverage in terms of banks that enable the API access, in
• 25:41
  terms of merchant consumers that have bank accounts that could
• 25:45
  immediately be used. And the merchants just kind of
• 25:48
  need to put it in place and the rest will follow like we've seen
• 25:50
  with these other payment methods.
• 25:52
  We're in a payments Cold War at the moment with this whole sort
• 25:55
  of this sovereignty talk. It's like the US, our allies or,
• 25:59
  you know, MasterCard, Visa or like, yeah, some sort of Cold
• 26:03
  War experience in payments going on.
• 26:04
  But like in terms of then when we talk about one of the big
• 26:09
  ones and we've we've covered VRPS and I completely agree
• 26:12
  around the the failover piece and running, you know, 1 doesn't
• 26:15
  have to replace the other. But when we talk about
• 26:17
  innovation and you know, the shackles really been off with
• 26:20
  with pay by bank as we've explored different iterations of
• 26:23
  it, the big common push back from the card industry in
• 26:29
  particular is consumer protection, right?
• 26:31
  And I'll ask this to to both of you, right?
• 26:33
  But is that going to kill innovation?
• 26:36
  And you know what's what's the way forward as far as consumer
• 26:39
  protection is concerned with pay by Bank?
• 26:42
  I think when we're answering this, let's be clear, we're
• 26:45
  talking about purchase protection.
• 26:47
  Consumer protection exists in pay by bank.
• 26:49
  If something goes wrong with your payment, for example,
• 26:52
  heaven forbid, hopefully not a Truler payment if it was the
• 26:55
  wrong amount, for example, you are protected under the PS Rs as
• 26:59
  is there any other payment method that you use?
• 27:01
  And you are fully entitled to go and get a refund as a customer.
• 27:05
  You also have the Consumer Rights Act, you know, underlying
• 27:09
  protection for majority of, of purchases in, in the, in auk
• 27:12
  context. And I, I think there's, there's
• 27:16
  a nuance to this debate, right, that we're talking about
• 27:18
  purchase protection. Do I need the same level of
• 27:21
  protection for going to buy a coffee at the coffee shop that
• 27:25
  I'm going to drink there And then and if it's not great, I'm
• 27:27
  probably going to go back up to the barista and say, please, may
• 27:29
  you remake this versus if, for example, I'm buying a, a washing
• 27:34
  machine. And I think what we're, what
• 27:36
  we're talking about is there's a lack of chargebacks in, in open
• 27:39
  banking and, and, and pay by bank chargebacks are a 20th
• 27:43
  century invention that were introduced to tackle the issue
• 27:47
  of card fraud, which is just a risk that doesn't apply in the
• 27:50
  same way for pay by bank. So it's much more nuanced than
• 27:54
  saying, you know, open banking doesn't have any consumer
• 27:57
  protection. It just doesn't have
• 27:58
  chargebacks, which, you know, for merchants is actually a
• 28:02
  really good thing. Chargeback fraud is increasingly
• 28:04
  an issue that they're grappling with.
• 28:06
  It costs them a lot of money, bluntly.
• 28:08
  And so why would we want to add on a feature of protection that
• 28:14
  has all of those frictions and, and, and issues with it baked
• 28:17
  in? And I, I think I wish there was
• 28:20
  a bit more nuance to the debate. It's kind of quite blunt.
• 28:23
  And actually the government themselves have acknowledged it.
• 28:25
  So in the National Payments vision, it says the same level
• 28:27
  of protection isn't necessary depending on the payment that's
• 28:30
  taking place. So to the start of your question
• 28:33
  of whether does it kill innovation, Well, actually I
• 28:35
  think innovation is probably the lens that we should be looking
• 28:38
  at purchase protection through. How do we apply a much more
• 28:42
  modern innovative approach to tackling purchase protection
• 28:46
  that really deals with the risk of the payment rather than a
• 28:49
  blunt instrument like chargebacks, which, you know,
• 28:52
  probably over ensures the vast majority of payments that don't
• 28:54
  need purchase protection alongside it.
• 28:56
  So again, I don't, I don't see it as an either or.
• 28:58
  I kind of see innovation being a solution there.
• 29:01
  I think the schemes kind of have it as a protective badge of
• 29:04
  honour now. But I think COVID particularly,
• 29:06
  a lot of people experienced chargebacks or went through
• 29:09
  their first chargeback process during the the pandemic and the
• 29:12
  market became more aware of what a chargeback was and how to
• 29:16
  interact with the system of a chargeback.
• 29:18
  And that's definitely been used as a or portrayed as a defensive
• 29:21
  mechanism. I think when people are buying
• 29:24
  products and services, holidays, whatever it might be.
• 29:26
  But also we've seen businesses that have have gone under and
• 29:29
  the first thing they do is go and speak to your bank and your
• 29:32
  bank will go, go and speak to the payment company that process
• 29:34
  the payment, right? Raise a charge that you'd
• 29:36
  encouraging people to raise chargebacks, right?
• 29:38
  So that the fraud element you talk about certainly interesting
• 29:41
  as well, but does that then mean this is something that needs to
• 29:44
  be taken by marketing teams of organisations like True Layer
• 29:47
  and and pushed out as well? Hang on, guys, let's let's call
• 29:50
  out the BS here, right? Like if, if that's what we're
• 29:53
  talking about ultimately. We haven't quite moved to
• 29:55
  getting the market team, marketing team on it.
• 29:59
  But I I should say that, that I think there is a lot of
• 30:03
  misinformation out there. And if you, if there are gaps
• 30:07
  clear like the insolvency, the insolvency part is an is an
• 30:13
  issue that needs to be resolved and it is part of all, all of
• 30:16
  the workings that are going on right now.
• 30:18
  But the reality is also like Megan was already alluding to,
• 30:22
  chargebacks don't work very well for the vast majority of
• 30:26
  merchants that we speak with. And I speak with enterprise
• 30:29
  merchants exclusively. They are quite happy to take
• 30:33
  back control of that process. They want to make their
• 30:37
  customers good if things go wrong in the vast majority of
• 30:41
  cases. But the reality is this one of
• 30:43
  the merchant risk councils payment and fraud reports showed
• 30:48
  one of the recent ones that first party misuse friendly
• 30:53
  fraud is the second biggest fraud reason for merchants,
• 30:58
  second only to policy abuse. So not even real fraud like,
• 31:03
  and, and that's a massive problem.
• 31:05
  People just chancing it, going to their bank and being waved
• 31:08
  through and the merchant has to deal with it and, and we have
• 31:11
  this unique opportunity to to find a better way of dealing
• 31:15
  with this. There are reputable merchants
• 31:19
  out there that want to make them good.
• 31:20
  They have their own policy to make the customer good, but you
• 31:24
  have to differentiate between a real issue and something someone
• 31:30
  that is just chancing it. And do you feel like the regular
• 31:34
  the the regulation gives you leverage with the banks where
• 31:38
  right now when it comes to open banking?
• 31:42
  I mean, regulation, I think there's a difference between
• 31:46
  regulation that enables our growth and regulation that, you
• 31:50
  know, ultimately can slow things down.
• 31:52
  And I don't think that's just true for open banking, but
• 31:54
  probably if you speak to any firm sort of navigating the
• 31:57
  financial services regulatory system at the moment, it's quite
• 32:00
  an active debate between what is enabling regulation, what is
• 32:03
  kind of the more compliancy red tape stuff that we want to cut
• 32:07
  so we can unleash all of this this this growth that ultimately
• 32:11
  the government's looking to drive.
• 32:13
  And I think there's a new approach to that through
• 32:17
  obviously the commercialisation of open banking.
• 32:20
  Nope. Do you want me to just carry on?
• 32:23
  Yeah. Just carry on.
• 32:25
  What's that? I thought that was the FCA
• 32:28
  coming in then. So that should change through
• 32:32
  the commercialization of open banking.
• 32:34
  And the banks have sort of said, well through commercializing it,
• 32:38
  that gives us an incentive to provide a better user
• 32:41
  experience, reduce friction, etcetera.
• 32:44
  But regulation can also help with that.
• 32:46
  So within the current regulatory framework, there are things that
• 32:49
  prevent banks from putting obstacles in place if a consumer
• 32:52
  wants to use open banking. So I think that that regulatory
• 32:55
  bedrock has always got to exist in terms of making sure banks
• 33:00
  are consistently offering a really good consumer experience.
• 33:04
  I think the UK is falling behind a little bit here.
• 33:06
  Our payments, the PS Rs haven't been updated in nearly a decade
• 33:10
  now. We know the EU has just
• 33:12
  finalized PST 3. And so I think that's a really
• 33:15
  good example of where the UK can look at well, what actually
• 33:18
  we're trying to achieve here with pay by bank.
• 33:21
  Well, it's to develop a seamless and ubiquitous payment method
• 33:24
  and how can regulation support in that goal.
• 33:27
  So as I said, our, you know, regulations tight enough in
• 33:30
  terms of making sure we're seeing a consistently good
• 33:32
  experience across banks. We know that the amount of
• 33:35
  authentication screens, for example, a consumer has to go
• 33:38
  through really varies depending on who they bank with.
• 33:41
  They should sort of be trying to level up to the highest bar
• 33:44
  rather than coming down to being what we're just scraping here
• 33:47
  through from a a regulatory compliance perspective.
• 33:50
  So it'd be interesting to see how when you have both the
• 33:53
  commercialization incentives plus there being a much stronger
• 33:56
  sort of regulatory foundation to build on, how that actually
• 33:59
  translates through to a better user experience.
• 34:02
  So if we jump forward five years, what would you like to
• 34:05
  have seen disappear in that time that have been the roadblockers
• 34:08
  that have held us back in this market?
• 34:11
  I think there's, there's a few answers to that question, but I
• 34:15
  think ultimately it's this arbitrary sense of the ways open
• 34:20
  banking can be used. I think in every way a consumer
• 34:23
  can use their card, I want them to also be able to use pay by
• 34:26
  bank. And while regulation has been
• 34:28
  really good at enabling a lot of that, that has also restricted
• 34:32
  us in terms of the use cases and ways that we can offer and share
• 34:35
  the, the, the, the product to market success in five years
• 34:39
  hopefully means invisibility in a weird way.
• 34:41
  I, I, I don't really want us sat around talking about whether
• 34:44
  paper bank is a good alternative to add on to the checkout.
• 34:47
  It should just be the way that we are, you know, powering our
• 34:50
  subscriptions, buying our groceries, hopefully buying our
• 34:54
  cup of coffee in person as well, because in store is something
• 34:57
  that is actually neglected a lot in a lot of these conversations.
• 35:00
  But ultimately, if you're looking at a ubiquitous payment
• 35:03
  method, in store transactions is something that we need to
• 35:07
  grapple with as well. So I think it's a much better
• 35:10
  user experience. It's the full suite of use cases
• 35:13
  being available out there. And they're actually, regulators
• 35:17
  aren't afraid to kind of use that regulatory foundation to
• 35:20
  level up the experience across the banks.
• 35:23
  What's what's the biggest risk? Do you feel if if we get this
• 35:27
  wrong? I, I don't think there's such a
• 35:31
  thing as a risk of failure. This is high on the agenda for
• 35:36
  the Treasury and and the regulators.
• 35:38
  I don't think there's a risk that it will completely flop.
• 35:43
  It's more like the speed to market and the fact that we need
• 35:48
  to accelerate what we've got, like Megan said, so we don't get
• 35:52
  left behind in other markets to ensure that merchants and
• 35:57
  consumers have the right payment methods available, have
• 36:01
  redundancy in the checkout. And so we're on the right path,
• 36:06
  but we can't take the foot of the gas pedal now and.
• 36:09
  This is maybe not necessarily specifically an open banking
• 36:12
  question as we we come to the end of our chat, but what is the
• 36:15
  one thing in payments that excites you both the most right
• 36:19
  now? And I'll just start with you.
• 36:23
  For me, it's, it's the delta that, that kind of the gap
• 36:26
  between what, what we know, what true layer is working on and
• 36:30
  what the market doesn't know just yet.
• 36:33
  It's, it's an amazing time to be in the open banking space and to
• 36:38
  be able to work with some of the most exciting businesses to
• 36:42
  bring this to life to, to be part of this shift and how
• 36:45
  consumers pay in the UK and in Europe is immensely exciting.
• 36:51
  For me, I think it's a little and you said payments, of course
• 36:54
  I'm going to talk about pay by bank and open banking.
• 36:57
  But for me it feels like a little bit of a perfect storm
• 36:59
  going on. You've, you've got the
• 37:01
  commercialisation of open banking going on that's going to
• 37:04
  increase that functionality, hopefully improve user
• 37:07
  experience. You've got government and
• 37:09
  regulators running behind this, not just for the sake of doing
• 37:13
  it for competition, but actually really viewing this as a means
• 37:16
  to driving growth in the wider economy, both in terms of the
• 37:19
  savings that it realises for merchants, how that can be
• 37:22
  eventually passed on to consumer.
• 37:24
  But how do we grow our open banking sector to be a better
• 37:27
  contributor overall to U, KG, DP?
• 37:30
  You've got the Bank of England stepping in and saying, well,
• 37:33
  yeah, there is probably something here on the resilient
• 37:35
  side that that we're missing. So how can we bring account to
• 37:39
  account in store and make that a, a viable reality for for
• 37:43
  merchants? And then as, as now she said,
• 37:46
  we've got, you know, huge merchants that are bringing this
• 37:49
  to market, putting it in front of consumers.
• 37:51
  And I think the growth of open banking to date, I think is only
• 37:54
  just scratching the surface. And actually when all of those
• 37:57
  components line up at the right time, what does that mean in
• 38:00
  terms of those those numbers of consumers using it, merchants
• 38:04
  that are looking to put it at the checkout and that overall
• 38:07
  adoption trajectory? So, yeah, I think it's the most
• 38:10
  sort of positive and and and momentous time for open banking
• 38:14
  that we've seen in a really long time.
• 38:16
  And to bring that scalability to life.
• 38:18
  And in case I get it wrong I will will ask.
• 38:20
  And in case you guys get it wrong then you'll be in trouble
• 38:22
  with your bosses. But your total user base at the
• 38:25
  moment and monthly transaction volume at Trulayer.
• 38:29
  Give me the the figures on that. And I think our user network is
• 38:34
  about 22 million user sets across UK and Europe and we're
• 38:39
  growing about a million a month and the TPV is around 10 billion
• 38:44
  a month. 10 billion. Wow.
• 38:47
  Impressive thing. It's quite a big market to go
• 38:48
  after then, right? Yeah, scratching.
• 38:50
  The surface, so more to come. Before we wrap up now, Jim,
• 38:54
  Megan, we invite our guests to talk about one thing that really
• 38:57
  frustrates in the industry that ick.
• 39:00
  What would you like to bring on the shelf of Shane?
• 39:03
  OK, I'll go first. Mine is, and again, of course
• 39:07
  it's going to be open banking specific, but why is it that if
• 39:11
  I want to order a pizza, for example, off just eat and I want
• 39:15
  to pay by bank and it takes me through to authenticate in my my
• 39:19
  banking app? And this isn't true for all
• 39:21
  banks, I should add. But in certain banks cases, I've
• 39:24
  got to go through a sort of payment selection reason.
• 39:27
  I have all these fraud banners and warnings.
• 39:30
  And what is the purpose of this payment?
• 39:31
  Are you transferring it to friends or family or are you
• 39:34
  buying a good or product online or whatever it might be?
• 39:36
  I understand that those are there for a reason in terms of
• 39:40
  reducing fraud. For example, if I've, I don't
• 39:42
  know, want to buy something off a stranger off of a particular
• 39:45
  marketplace. But if I'm just trying to buy a
• 39:48
  pizza and it's an open banking initiated transaction through a
• 39:52
  reputable provider like True Layer, I should not be having to
• 39:56
  go through those fraud warning screens.
• 39:57
  I just want my pizza and they're so annoying.
• 40:00
  I love that one because that does my head in and my bank does
• 40:03
  it for when I'm paying my other bank, which is in my name, which
• 40:06
  I make regular payments to and it's still asked me every time.
• 40:08
  Go, Jeff. That's on the shelf.
• 40:10
  For shame. This made it onto the shelf,
• 40:12
  yes. Oh, I'm very shocked for.
• 40:14
  Sure. Mine is not necessarily not
• 40:19
  controversial, but it's one that gives me the egg because I
• 40:22
  literally had to go through it last week.
• 40:24
  It's these outdated payment pages where you have to actually
• 40:28
  enter your 16 digit card number where you then also have to
• 40:33
  choose the brand and the type and even switch if switch is
• 40:40
  still even a thing and where you know it's 2026.
• 40:45
  If the if the if the payment page doesn't recognise your card
• 40:51
  number from the 1st 6 digits, then clearly the merchant and
• 40:55
  the provider haven't updated those pages since the Spice
• 40:57
  Girls were in the charts. And then there is no like paper
• 41:02
  bank yet in the in the checkout and they ask you questions that
• 41:08
  that are completely irrelevant for the purchase.
• 41:09
  Like it's, it's, it's clunky, it's not up to date and for me
• 41:15
  it has to go on the shelf. So any payment Violet doesn't
• 41:18
  have a bin look up, we should go in the bin.
• 41:20
  We'll play a game. And guess that gateway off
• 41:22
  camera. We've got a few guests who may
• 41:26
  be. Yeah, absolutely.
• 41:27
  I'm all for that. I'm all for.
• 41:29
  Packing on the shelf as well. 100%.
• 41:30
  Look, thanks so much for joining us today, guys.
• 41:33
  Where can people get in touch with both of you?
• 41:35
  Find out more about Trulayer. Well, trulayer.com for start and
• 41:41
  you can find me on LinkedIn. I am also on LinkedIn, always
• 41:45
  happy to connect and chat. All things open banking,
• 41:48
  payments, fintech. Well, thanks for joining us on
• 41:50
  the show. Thank you for having.
• 41:51
  US Cheers.