Q&A: Pay360’s Stephen Ferry on getting public sector bodies to embrace Open Banking

Stephen Ferry, managing director at Pay360, an Access company, reveals what needs to happen for wider adoption of Open Banking in the UK’s public sector, and the role of government in encouraging uptake.

1. Pay360 came under new ownership in December 2022 – can you tell us about that?

Pay360 was owned by Capita up until December 2022. We went through a divestment process – the Access Group acquired us on 1 December. We now sit within a division called Access PaySuite. We’re still keeping the brand at present, but we’re calling it Pay360, an Access Company.

It is still business as usual, but it brings us into a dedicated software group which has additional benefits from a product, sales and customer experience. The benefit of that for Pay360 is it’s about the discipline of producing software and bringing it to market with clear customer benefits and outcomes.

Within the Access PaySuite, the benefit we’ve got is they’ve been acquiring direct debit companies for the past two to three years and are moving into a single platform and have strong capabilities and customer references from a direct debit basis. We have used other direct debit companies in the past but now, going forward, we’ll have direct integration into their direct debit capability. They’ve also got another solution called EarlyPay, which is about salary advance, which again in this current climate, is a very attractive model for employers and employees to provide access to salary advances to deal with short-term cashflow issues. These are new capabilities we can use from Access PaySuite to support our customers more effectively in the future.

The Access Group has a very large customer base, particularly in divisions like hospitality, and health and social care where payments are required, so there’s an opportunity to work with those divisions to try and promote out the payment opportunities that sits in those customer bases. So overall, it’s a good home for Pay360 and one that all our staff and customers will benefit from in coming years.

2. What has been the impact of Open Banking on the private sector, broadly speaking?

First and foremost, Open Banking has been geared for the private sector. If you look at the players in the marketplace that deliver Open Banking, either direct or indirect, I think that is where the sweet spot is. It was about unlocking the retail banks’ monopoly, which is partly why we’ve got an Open Banking ecosystem.

Secondly it’s about, how can SMEs and consumers use a different payment channel? That’s the bit that is really exciting and the bit that opens it up. This is where, I think, the consumer gets the value. With Open Banking, consumers are getting real clarity on what they spend, how they’ve spent it and also it can help assess affordability.

Stephen Ferry, MD, Pay360, an Access company

The principle of sharing how you’re spending money, who you’re spending it with and spending habits will help reduce debt and friction downstream.

In the private sector, the focus tends to be on the SME space, rather than the large Tier 1 organisations.

There are 6 million SMEs in the UK and they are ripe for Open Banking. They’re ripe for it because of the price materiality – if you look at what Open Banking disrupts, it disrupts Mastercard and Visa, it disrupts the credit and debit payments on a card. It’s a timely opportunity in an economic climate we’re in today. This is a way for the businesses to pass on a saving to the citizen and consumer. That might be a catalyst to try and improve the adoption, particularly in the public sector. 

3. Is there a risk that the public sector is falling behind, as you warned in an op-ed for Open Banking Expo last year?

It is a very challenging market to bring new technology to. The public sector is risk-averse and, in the main, they’re not what we call innovation adopters, they are followers. They’re usually followers five or 10 years downstream. They’ve got to trust it and then they’ll start to adopt it and then embrace it.

I do believe that Open Banking must be a play for anyone who is a financial director or in a role where they’re looking at the treasury fund management.

One of the challenges that we probably need to consider is that Open Banking can mean many things to many people, both in the private sector and the public sector. Part of the challenge we’ve got is demystifying what Open Banking is and what it is not, along with ensuring all citizens understand it is a safe and secure way to make payments.

That’s a failing on behalf of the industry and the Open Banking forums because we’re not getting the message home to consumers and citizens. We are getting it to the businesses, we’re getting it to that level. But, considering how long it’s been in play now, it should have had far more adoption.

4. How much can public sector bodies expect to save by adopting Open Banking?

If they can save anything between 15% and 30% of their card transaction costs, that is quite significant. But that’s an assumption of 100% adoption and we’re looking at less than 1% adoption at present.

We need to get the adoption rate up higher. But, I honestly believe it’s a channel that needs to be on every council website, it’s a channel that needs to be in every public body’s armoury to give consumers and citizens choices, but also to reduce costs.

5. Is there anything you’d like to see come from government to encourage uptake among the public sector?

Both central and local government definitely has a role to play. It’s a case of, how do you get the message across and make it simple for citizens and consumers?

We should also consider, where do you put Open Banking on a payment page? When you look at a payment page, the first option that usually comes up is debit card because that’s what the majority use in the UK, then it’s a credit card and then direct debit.

I’d put Open Banking right at the top, because what is a safer way to move money from account-to-account than Open Banking? The rails are already protected.

The first payment option people see is probably what they’ll pay with. It needs a pop-up that says, ‘do you know that your funds are even safer using Open Banking?’. That would enforce the education principle and could help to drive adoption, as well as awareness.