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'"We decline to stretch or update statutory words of plain and ordinary meaning in order to better accommodate the digital age," says Judge Dennis Jacobs.' Fair enough. Wonder if there are any other statutes that bettter accommodate the digital age without stretch or updation. Or, is stealing fair game for digital properties? 

The BEFORE-FPS scenario might have been unfair to customers if that's what the OFT decreed but the AFTER-FPS scenario is highly differentiated when compared with ACH-based systems in many other parts of the world (e.g. USA). Where it's applicable, FPS delivers RTGS-like value, which justifies fees. In a free market, fees should be a matter between a bank and its customers. As far as I know, OFT doesn't concern itself with whether a bank can levy fees or not. 

Had you EFTd a like amount, the fees would've been over 30% - as I learned to my dismay when my bank in London slapped a fee of EUR 18 equivalent to transfer EUR 55 equivalent to another bank in Frankfurt. With fees like these for commodity products, no wonder banks can afford to give away highly differentiated offerings like Faster Payments for free!

This and other mobile apps like Mobile RDC prove that digitalization can prop up brick-and-mortar usage, not just online. They also put to rest the misguided notion that all bank customers having smartphones will immediately shun branches, cash / ATMs and cheques. While banks might want to downsize these three channels in an attempt to cut costs, their customers don't seem to be in any hurry to give them up. 

Apt post that captures the current zeitgeist. I think it was Gartner that predicted that the CMO will have a larger IT budgets than the CIO by 2015 or so. Not sure whether that will ever happen but, for SaaS, we're already seeing business heads actually placing orders. Once the vendor sells the business benefit to them, they only need their corporate credit cards!

Nice post. Brings back fond memories of FPS launch back in May 2008. Re. your comment, "Indeed, of the original members, Northern Rock has dropped out and Santander has acquired Abbey and Alliance & Leicester.", if my memory serves me right, even as on the launch date, (1) Northern Rock was not a member of FPS - it had gone belly up a few months previously (2) Santander had already acquired Abbey and Alliance & Leicester and had in fact regretted inability to join FPS, citing the need to achieve stability post the implementation of a common core banking system across the three banks.

The topic of fees for at least a few FPS transactions was broached almost a year before the launch of FPS. I'm surprised that, many years later, even a unique offering like Barclays PingIt is being given away free of cost! 

The impact of regulation on banks is two-fold: (1) Put roadblocks to innovation of the nature that could potentially enhance consumer experience (2) Make banks answerable to a regulator.

KYC is one example that is applicable to both USA (developed nation) and India (developing nation). Because of KYC, it usually takes a few days and a branch visit before a bank account can be activated. 

2FA is another example. The banking regulator in India uses its direct jurisdiction to ensure that banks comply with this regulation for money transfer transactions. It also uses its indirect jurisdiction via acquirer banks to make merchants - over which it has no direct control - comply with this regulation for credit card purchases. In the USA, 2FA has been mandated around seven years ago. While not all banks and merchants are compliant with it even today, the existence of regulation can't be denied.

Both KYC and 2FA cause a lot of friction and worsen consumer experience.  

In both nations, customers can complain to the banking regulator if something goes wrong with their banks. To avoid bad publicity, banks might be compelled to make their customers jump a few more hoops (e.g. insist upon applicants to visit the branch before activating a bank account), even if this results in inferior consumer experience. On the other hand, nonbanks can provide great consumer experience (e.g. PayPal activating a merchant account instantly) because they know that they're not answerable to any regulator in case something goes wrong (e.g. PayPal puts an arbitrary freeze on the merchant account).

After facing regulatory scrutiny in the developing world (e.g. India), nonbanks (e.g. PayPal) are coming under the regulator's radar even in developed nations (e.g. USA, post Dodd-Frank-Durbin). While consumer experience might nosedive, money might be safer, as a result of this development.

When a certain biller followed exactly this practice with me to boost its eBill adoption, I was too lazy to ask it for a printed bill. This is probably what the biller expected when it implemented this practice. Since I need the bill in paper form for my downstream processes, I take a print out myself. I got ticked off with this biller for taking my preference for granted. Whenever I've needed a similar product in future, I've ensured to buy it only from this biller's competitors (none of whom forces eBills). Whenever anyone has asked me for a recommendation for a vendor for this product category, I've never recommended this biller. My behavior may not be representative but, at least with me, the biller lost the war for revenues and customer advocacy even as it might have won the battle for eBill adoption. It's the biller's choice how it wants to run its business but it's burying its head in the sands if it doesn't recognize that its actions can have unintended consequences.

You forgot the fourth step: Make banking an unregulated industry. On second thought, this should be the first step for, without this, there's little chance of the other three things happening.

@Pat C:

I agree that false positives can play havoc with merchant revenues and customer satisfaction. At the same time, I don't see any fraud detection and prevention technology being completely immune to it.

For example, in its "extra security layer" mode of operation, it appears that Proximity Correlation Logic is akin to the bank calling you up on your mobile phone to check if you're making a certain transaction. If so, I'm not sure how it will work for 'Card Not Present Recurring' and 'Addon Card Present One-Off' card transaction types that I'd described in this and this Finextra posts. In both cases, the transaction is genuine but isn't directly executed by the primary cardholder, so the registered mobile phone is not within the proximity of the person actually executing the transaction.