Paym - RIP , gone but not forgotten.

Pay.UK, the payments operator and, standards organisation for the retail interbank payment systems in the UK recently announced that the Paym mobile payments service will close permanently on 7 March 2023.  What? This is a backward step for the UK consumer and the finance industry. Paym had the potential to be a world-beating product.  However, the development and marketing of the product by Pay.UK and the banks have been disjointed in my view. They cannot claim on one hand that Google, Amazon and the FinTechs are out for their lunch yet fumble innovative solutions like Paym. In my view, they have dropped a massive collective clanger!

Barclays’s Pingit which was their implementation of Paym was closed last year at the end of June 2021. The number of transactions had been falling for years and it got to a point where it wasn’t worth offering the service any longer. Once a major UK bank had pulled Paym, it was only a matter of time before the service got pulled.

So why did a potentially innovative product fail to excite the banks and consumers? In my view the reasons for failure fall into three broad areas:

•  No single product brand across banks: Person-to-Person (P2P) payments are a natural way of making payments – as one would with cash. Venmo has succeeded, Vipps in Norway has exceeded its uptake by 5x their initial prediction. Paym was going to be the platform for the banks to offer Person to Person (P2P) payments in the UK and avoid being disintermediated by Venmo, Facebook, GooglePay, PayPal, etc. However unimaginative positioning of the product lies behind a lack of customer demand. Each bank implemented its own branded version causing confusion in the minds of the customer. Instead of seeing Paym as an alternative payment method customers couldn’t make sense of it. They also couldn’t use the system as there were so few other customers on it.

Person 1: “Are you on X”, 

Person 2: “No I am on “Y”

Person 1: “oh! I’ll have to send you a payment what are your bank details?”

•  Poor product positioning: Paym linked a customer’s account and their phone number. The whole system relied on a central database of accounts and associated phone numbers. By linking the bank account with a phone number a number of scams are easily cut out. The payer bank could use the information in the Paym dataset to call or text to validate the identity of the payee.  All that was required was correct product positioning with the payees and payers and we would have a much-needed extra layer of security against payment fraud.   
•  No API: The use of API technologies since April 2014 when Paym was launched has gone off the scale.. API interfaces make it easy for third parties to integrate their applications with a service/ product. A solid API for Open Banking has been fundamental to it’s success. Vendors are able to easily integrate Open Banking calls in to their applications. But Paym never offered an API interface which is beyond belief.  If Paym was offered as an open API, I am sure FinTechs and other innovators would have transformed its use beyond the use case that Pay.UK had in mind.

To say there wasn’t enough demand for Paym makes no sense. Surely, it was Pay.UK’s job to create the product as well as the demand. The product wasn’t positioned correctly with the banks and lacked an API enhancement which could have increased its uptake by FinTechs.

About Gian 

Gian is a Finance Technology (FinTech) Consultant based in London.  He specialises in educating clients on how they can reduce their exposure to financial crime and in-depth insight into FinTech.  Gian has been in the FinTech industry for some 25 years and worked with the major banks and card companies at Lloyds, Barclays, HSBC and RBS, Mastercard, and Visa in a long and successful career.

Gian is a regular blogger on payments & fraud trends: https://innovationandchangeinpayments.blogspot.com .  He is also a trusted advisor to a number of consulting networks: GLG, Atheneum, and Guidepoint where he regularly advises banks and researchers. 

LinkedIn: https://www.linkedin.com/in/gianmahil/