On Jan. 26, the Federal Reserve released their plans to explore faster payments more in depth, with a potential release of their study on Feb. 24-26 at the Eastpay Conference in Orlando. While the payments world, to quote MPD CEO Karen Webster, is on “pins and needles” to see what the plans are for American consumers and merchants, the United Kingdom is busy implementing its own fast payment system using mobile phones.
The system in the U.K. is called Paym, which is a collaboration between major British banks and the U.K. Payments Council that is overseeing the plan. The idea of the system is to allow cellphone users to transfer small payments between mobile customers without the need to exchange bank information. Last weekend, Paym reported that over 1.8 million consumers have signed up for the service since its April launch, transferring over 26 million pounds between consumers at an average of 53.65 pounds per transaction. The service has primarily attracted young customers, with 71 percent of them between the ages of 16 to 34. Payments have also been largely on the weekends, where 49 percent occur according to a November 2014 data snapshot. Most of the payment transfers have been to friends, partners, or parents during this time-frame, which, according to The Telegraph and Argus, would indicate that it is primarily a convenient way to pay back small debts, up to 250 pounds in one day. Already, most British banks like Barclay’s and RBS have bought in, which would be an important priority for the Federal Reserve.
Paym would seem to demonstrate the kind of “social benefits” that existing Fed studies indicate would be served by speeding up faster payments, such as same day ACH that Paym mirrors, even if there is a prediction that banks would lose money in the process. However, the payments industry may have to wait until later this month to hear the full plans in Orlando.