Government departments could cut payment costs through API deal

The UK government adds fintech to its approved procurement list which promises to cut the costs of receiving payments

Government departments could save millions of pounds a year following the addition of a payments application programming interface (API) on its official procurement list.

Through its Crown Commercial Service’s (CCS) Payment Acceptance Framework, the government has approved a payment initiation service (PIS) from open banking software company TrueLayer.

Government departments can now use the technology to receive payments online without having to use the payment systems owned by banks, therefore reducing costs and simplifying processes. If this technology were used across government, it would same millions of pounds a year.

When people are making payments to organisations, such as the DVLA or local council, they can consent to the government deducting the money direct from their account to the government services account. These bank-to-bank payments remove card fees and charges from banks for using payment systems. The government departments will pay a small fee per transaction to TrueLayer.

Those paying will be able to do so directly to government organisations without the need for a credit or debit card.

Through its payments API, TrueLayer can be integrated into the website of government departments.

Francesco Simoneschi, founder of TrueLayer, said while a new means of payment might appear seem like minor news, widening the way people can make and receive payments from the government is very important.

“A significant number of individuals simply don’t have access to credit and debit cards,” said Simoneschi. “This can essentially lock them out of a lot of public and business services. Payment initiation solves this problem. It is also much faster and cheaper and, if adopted across the public sector, could save taxpayers a huge amount of money.

Jan Culshaw, category lead at Crown Commercial Service, said: “We look forward to working with all suppliers and helping the public sector access these important services.”

TrueLayer’s appointment to the CCS is for an initial three-year period.

Set up in London in 2016, TrueLayer is a product of the EU’s Payment Services Directive (PSD2) and the Competition and Markets Authority’s (CMA’s) rules for open banking in the UK.

These mean banks must be able to give third-party financial services suppliers access to customer data, if the customer agrees, through APIs. It currently offers two APIs, with a data API as well as one for payments.

In October 2019, TrueLayer announced that it had become a fintech partner with Visa, which made its open banking APIs available via its network.

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