Payment provider Advanced Payment Solutions (APS) has signed an agreement to allow its customers to access banking services in 11,500 Post Office branches.
This follows a major IT project between the two organisations.
Business and consumer users of APS’s digital current account service, Cashplus, can withdraw cash in real time as well as make instant balance enquiries from Post Office counters. APS also provides lending and prepaid credit cards.
APS has a large public sector customer base. Its prepaid card and current accounts, which are run in partnership with MasterCard, support more than one in five of the UK’s local authorities. These authorities pay over £180m worth of benefits payments onto the cards each year.
Across its entire customer base APS has processed over £3bn worth of payments to date and issued more than 1.2 million Cashplus cards. The company makes its money from account fees, but rather than charge people for things like exceeding overdrafts it will contact them before they do so.
Rich Wagner, CEO and founder of APS, said alternative financial services companies can benefit from partnerships such as this.
APS has an existing relationship with the Post Office, which allows customers to pay bills, but the new agreement extends this to include real-time banking processes such as depositing and withdrawing cash on the spot and making instant balance enquiries.
“It has taken seven years of engaging with the Post Office to encourage the development of technology which is specifically tailored to APS,” said Wagner.
There has been a major technology project involving APS, the Post Office, Vocalink and card processing platform FIS.
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Wagner said the deal was important because although customers often crave the online experience, branch facilities offer choice.
“There is no denying that demand for branch banking is falling as people look for simple digital solutions. The ability to open a current account online, without numerous branch visits, and then manage payments online is a big draw for most of our customers,” he said.
“But it is important to acknowledge that customers have diverse needs and there are instances where access to over-the-counter services is key,” added Wagner, citing business customers depositing daily cash takings as an example.
APS is one of a growing number of challenger financial services companies taking on large incumbents.
Recent research by the Economist Intelligence Unit found that 36% of banks think the biggest competition they face is from technology companies, while 21% said non-financial services firms such as retailers were the biggest threat, 13% said new banks and 12% said payment specialists.