Home Open Banking & Finance UK Government Digital Service to explore adding open banking to Gov.UK Pay

UK Government Digital Service to explore adding open banking to Gov.UK Pay

Payments: the UK public sector is providing a growing number of examples of interest in open banking technology| Credit: PublicDomainPictures; Pixabay

The UK government is preparing to explore the possibility of incorporating an open banking function into Gov.UK Pay – the government service that public sector organisations can use to take online card payments.

The move – which will be seen as the latest illustration of mounting UK public sector interest in the possibilities created by fintech for government for improved service delivery – is mentioned in a newly published blog-post by Amanda Dahl, who is deputy director of digital service platforms in the Government Digital Service (GDS), which is part of the Cabinet Office.

In a piece titled ‘How common platforms deliver brilliant digital services’, Dahl highlights recent GDS achievements and provides an update on forthcoming priorities. In this latter section, she states that ‘later this year we’ll be investigating how Gov.UK Pay might offer open banking, which means that people will have the option to pay for services conveniently using their own banking app.’

Widely seen as global leader in developing an open banking ecosystem in the private sector, spurred by the creation of its Open Banking Implementation Entity (OBIE) in 2016, the UK is also increasingly blazing a trail in terms of public-sector interest.

The UK public sector’s first mover was HM Revenue & Customs (HMRC), which procured a fintech solution to enable the department to receive payments via open banking in March 2021 – a government use case for open banking that has apparently made the department a global pioneer. Just in the past couple of months the Crown Commercial Service (CCS), an executive agency sponsored by the Cabinet Office, began the process of creating a ‘dynamic purchasing system’ for open banking services for use across central government and the public sector.

OPEN BANKING: EXPLAINED Open banking, and its sibling concept open finance, are being encouraged by governments worldwide, in different ways and at different speeds, as a means of boosting innovation and competition in financial services. It is a reference to users sharing their data with third-parties (for example, fintech companies). ‘Open’ refers to open application programming interfaces (APIs): software intermediaries that allow two machines to interact. ‘Open APIs’ are APIs made publicly available to software developers. Global Government Fintech’s focus is on its potential to improve public service delivery.

Gov.UK Pay’s evolving services

Gov.UK Pay, which was introduced in 2015, takes payments and processes them using a payment service provider (PSP): either Gov.UK’s PSP, which is a company called Stripe, or Government Banking’s PSP, which is a company called Worldpay (central government or health sector organisations only). Government Banking is a shared government function.

In the blog-post, Dahl states that Gov.UK Pay has onboarded 163 services in the past 12 months, including the Forestry Commission and NHS Business Services Authority, ‘enabling them to take payments through online digital services’ — and that, in total, the service saw 23 million payments processed and £1.3bn (about $1.65bn) ‘cash value handled’ during the last financial year.

Gov.UK Pay also launched a new Recurring Card Payments function – initially with Kent County Council ‘and with more public services to follow’ – which enables local residents to save their payment details for use in ongoing regular payments, Dahl writes.

Dahl, who joined the GDS in December 2022, also mentions a separate planned fintech- and payments-related development related to popular mobile-payment technologies Apple Pay and Google Pay. ‘Gov.UK Pay already offers Apple Pay and Google Pay to central government digital services, but soon we’re releasing the same mobile wallet payment types to local authority services and this will be a great benefit to people who are paying for government services on the go, like paying for Clean Air Zone charges,’ she writes.

Clean Air Zone charges have been introduced in a growing number of urban localities, with drivers having to cough up if their vehicles do not meet emissions standards. Such zones exist in Bath, Birmingham, Bradford, Bristol, Greater Manchester (‘under review’), Portsmouth, Sheffield and Tyneside (Newcastle and Gateshead), according to the government’s Clean Air Zone website.

Dahl, who previously worked in the United States Digital Service, also mentions that Gov.UK Notify – which is referred to within government as a ‘government-as-a-platform service that allows clients of their API to send emails, text messages and letters’ – is ‘launching the ability to add attachments and QR [quick response] codes to letters, which will enable more government services to use the product to communicate to citizens.’

GDS: the UK’s Government Digital Service highlighted Dahl’s blog-post via ‘X’ (formerly known as Twitter)

RELATED ARTICLE UK government backs open banking with £100m-a-year eight-year supplier plan – our article (14 June 2023) on the Crown Commercial Service (CCS)’s plans to create an ‘Open Banking Dynamic Purchasing System (Data, Digital Payments and Confirmation of Payee Services)

CCS’s ‘dynamic purchasing system’

The CCS’s plans were revealed in a notice – which states a total value of £800m (about $1bn) over eight years – entitled ‘Open Banking Dynamic Purchasing System (Data, Digital Payments and Confirmation of Payee Services)’. This will ‘provide a vehicle’ for central government and the public sector to source open banking services, including digital payment services, account information services and confirmation of payee (CoP) services.

The government’s plans owe to the ‘ongoing growth and development of the open banking market’, according to the prior information notice (PIN), which stated that CCS ‘intends to launch for supplier onboarding’ from late-July with the dynamic purchasing system ‘anticipated to go live for use in the autumn’. The notice specified a budget of £100m per year for all financial years between 2023/2024 and 2030/2031.

Frameworks (or agreements) overseen by CCS help public- and third-sector buyers to procure goods and services from a list of pre-approved suppliers, with agreed terms and conditions and legal protections.

Dynamic purchasing systems (DPS) are one of four types of agreements available through CCS. A DPS allows suppliers to join at any time, ‘increasing competition and choice and meaning that it is open to new businesses, innovations and emerging technologies throughout the life of the DPS’.

Setting the value of the proposed (total) open banking spend in context, Global Government Fintech reported in January 2022 that CCS had created a four-year ‘Debt Resolution Services’ roster with a total proposed work value of £645m.

FURTHER READING One small website button, one giant leap for payments to government? – an article (6 April 2021) on HMRC’s launch of its open banking-enabled ‘pay by bank account’ option for people filing online self-assessment tax returns

‘Increasing interest’ becoming tangible

HMRC has now received more than 5.5 million tax payments – worth a total of about £13.5 billion (almost $17bn) – through open banking since the department introduced the option to do so, according to the department’s head of open banking payments, Rachel McLaren, speaking at the Global Government Fintech Lab event in Ireland on 18 May 2023.

Global Government Fintech reported earlier this year that HMRC had completed its rollout of open banking across all tax payment types capable of supporting it. The department’s head of payments, Nick Down, spoke at the time of ‘increasing interest’ across UK government in using open banking.

NS&I (National Savings & Investments), a UK state-owned savings bank, has recently followed HMRC’s lead in engaging a fintech company to enable the use of open banking technology to enable people to make payments. NS&I, which is a non-ministerial department, is using the same fintech company – Ecospend, whose acquisition by Sweden-headquartered Trustly completed in January – that HMRC has been using for the same purpose.

Reasons given by HMRC for using open banking technology to take payments include saving on the resource associated with tracking down payments that fail to arrive because payers have entered their tax/payment reference or other information incorrectly (‘keying errors’), as well as saving on the interchange fee charged by card-providers.

Those opting to pay their tax to HMRC via open banking use a website button titled ‘pay by bank account’ and ‘tick’ to provide consent for Ecospend to securely connect them to their online banking and initiate an authorised payment on behalf of HMRC (an ‘Open Banking Privacy Notice’ seeks to reassure users). The Ecospend-powered service uses validated and pre-populated payment details, enabling payments directly from a payer’s bank account. It is this automation that, its advocates believe, increases speed, reduces human error, and also has the potential to reduce fraud.


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