Well, subject to Competition and Markets Authority (CMA) rubber-stamping, Mastercard have almost got their feet under the table with their purchase of Vocalink, the operator of Faster Payments, BACS and Link ATM networks in the UK.
There is much speculation into why they have paid a 40x profit multiple for Vocalink.
Mastercard themselves say the deal will give them access to a major electronic financial transaction network in the UK to allow it to significantly increase its market share. It will give Mastercard access to Person-to-Person (P2P) and Business –to-Business (B2B) transactions through different payment channels such as mobile and bank payments rather than just Person-to Merchant (P2M) card transactions.
Direct Debit is a flexible and powerful payment method which has a proven forty year track record. One of the reasons Direct Debit remains so popular is because the general public has complete trust in it because of protection offered by the Direct Debit Guarantee. In a blog article last year, we discussed how the Direct Debit Guarantee introduces an element of risk to collections by Direct Debit, and how that risk to the collecting organisation (Service User) needs to be managed.
The new consumer watchdog for the banking sector, the Financial Conduct Authority (FCA) has reached an agreement with seven of the UK's largest banks and building societies which will undoubtedly help consumers avoid bank charges from failed direct debits.
In the unprecedented move, Barclays, The Co-operative, HSBC, Nationwide, RBS Group, Santander and National Australia Group will begin a process whereby direct debits, Standing Orders and future dated bill payments will be retried later in the day if they initially fail due to lack of funds. Lloyd's Banking Group advised that they already operate a similar system for most payments, and are working to extend the scheme to all transactions.
The framework to move Direct Debits from one bank account to another has been around for many years as the concept of switching bank accounts is certainly not a new one. Historically, moving your current account was a little hit and miss, occasionally a direct debit wouldn't move over and you would have to contact all of the people who make payments into your current account individually to ask them to change their records.