Launching the UK Payments Initiative

So we're really excited about the launch of the UK Payments Initiative, and bringing recurring pay-by-bank to market. It's been a long time coming, and we're really excited to finally have it here.

There are probably three things to highlight. One is to provide a genuine alternative to cards and the card duopoly, really aligning with the account-to-account elements of the National Payments Vision. There are 84% of retail consumer transactions that still go through cards, and it costs merchants £1.5 billion a year, so there's plenty of scope to improve that for them. The second part is really around securing payment sovereignty in the UK. We have critical payment infrastructure, and a lot of that has been going via overseas routes, so this brings it back into the UK's control. And the third is accelerating the adoption of pay-by-bank generally. We've had it for one-off payments, and this now brings it to the recurring use case.

Exactly. You've got Wero in Europe, which is really positioned to be exactly that: to create an account-to-account platform for domestic payments. This provides the UK equivalent. So it's really important for us to have that control over the national infrastructure, and that's what this brings. It moves people away from having to use a card on file, to being able to use their bank account, not just, as I say, for one-off payments, but also for recurring ones.

I think it's really about finding the right use cases. This initial launch of recurring pay-by-bank is aimed at utility companies, financial services, charities and government, sectors that have implicit consumer protection. Within that, direct debit has always been a key payments use case; they've had to find alternative payment methods for maybe vulnerable customers. If you take the energy sector, for example, you've got your smart meters, but you're still overpaying in the summer and underpaying in the winter. So what you can now do is make real-time payments aligned to your monthly bill, and give people better control over their monthly sums.

Exactly. And especially at the moment, people are much more conscious of how they use their money and how it works for them. Having that control is a very different concept from what they've had in the past.

Really, it's just getting people using it. Contactless had that sort of TfL moment, which really opened everybody up to using it. What we need is the same equivalent in the pay-by-bank arena, for people to use it on a regular basis, be comfortable with it, understand it, and then use it for both one-off and recurring payments.

That would be great. I enjoyed the London one myself.

Yeah. We've been a keen supporter of open banking and pay-by-bank from the beginning. We were there way back in the FCA sandbox, when this was first being developed as a concept, and we're really delighted to be one of the founding shareholder firms for the UK Payments Initiative, which launched yesterday. So for us, we see this as a critical part of the next evolution of payments.

I think one of the areas, maybe from a payer perspective, is consistency of the payment journey. Right now, payment companies like GoCardless can control how it looks when the merchant is signing the payer up, and we can control the endpoint, what it looks like at the end of the transaction. But in the middle is where they go through their online banking platform to authenticate the payment through their credentials, and that looks like one version for one bank and another version for another. So bringing some consistency into that, and refining some of the messaging, would really help to evolve people's understanding of it, and also how much they use it.

We're really delighted that, now this has launched, we can focus on what the next era is. As I mentioned, there's the first iteration, which is those selective use cases. After that, we're looking, hopefully in the next nine to twelve months, to bring this to everybody, to all types of merchants. And I think there's a lot of open opportunity. If I think about some of the e-commerce use cases, where traditionally you've had a card on file, you've had problems with recurring payments failing, or your card details expiring, and so on, there's a lot of open opportunity to fit into that space.

I think, for me, the thing I've really looked to learn more about is agentic AI.

For GoCardless, that's actually an area we've signed up to an FCA sandbox on as well. We think that's another future opportunity in the payment space, and in the evolution. But just learning how other people are using it, it's obviously conceptual right now, rather than actually being in practice, as people are building out their designs, understanding how that's going to work for the payer, all the elements we've been talking about with open banking for some time, and how that works in an agentic age.

I'm going to get in trouble with any answer I give.

I think, for me, as much as AI is important, it's also overhyped in reality, because it feels as though it's just a term that's thrown at everything. We've been using data science for a long time in how we process payments; if we'd called it AI, I think it would have had a much different reception. So it's really just understanding, "okay, how am I going to use AI to benefit people?", as opposed to "how do I just put AI into my platform because I want to use the word 'AI'?"