The growth and success of Experian Payments since its launch in 1997 mirrors the transformation in the way UK businesses and consumers pay for goods and services. And whilst the company’s first ten years were focused on the UK market, it is the international requirements of customers that are likely dominate the organisation’s next phase of growth.
To illustrate just how much the UK payments market has changed, consider the decline in the use of cheques and the increase in the use of Direct Debits (DD) and Direct Credits (DC) since 1997.
In 1998 there were 2,988m cheque transactions. By 2006 this had dropped to 1,778m, a reduction of 40.5%. During the same period, Direct Debit (DD), Direct Credit (DC), Standing Order and CHAPS Sterling payments increased from 3,055m to 5,605m; an increase of over 83%(1). In June 1997 (the month Experian Payments began trading), there were 69,781,000 Direct Credits and 130,323,000 Direct Debits. In December 2006 the figures were 190,274,000 and 242,973,000 respectively(2).
It is a similar story with the growth of Internet banking. In 1997 both Nationwide Building Society and Royal Bank of Scotland launched the first Internet banking services in the UK(3). Two years later and 4% of UK adults had become early adopters and moved their bank accounts online. By 2000, there were 3.3m Internet banking users. By December 2006, this had grown to 17m of whom 9.8m were exclusively using the Internet to access their current account(4) of which 60% were using the service to pay bills(5) . The volume of remote bill payments trebled in the five years to end 2005(6).
Neither automated payments nor remote banking services could have grown so fast or become so popular without assurances as to the robustness of the technology involved. At each stage of the payments revolution, Experian Payments has been ahead of the game, developing solutions to meet customer requirements for accuracy, reliability and efficiency.
Experian Payments: innovators from the start
In 1997 few organisations performed any significant validation of data they captured, even for Direct Debit collections. The UK payments industry was just introducing the new paperless Direct Debit system, allowing for the first time sign-up to services without signed paper mandates. This system is now used by around 50% of new Direct Debit users, and over 90% of Direct Debit Instructions are set up electronically.
Data integrity is the key to the success of these schemes and sustaining widespread customer confidence in the Direct Debit process. Experian Payments’ solution, Bank Wizard, was the first software in the industry to perform Direct Debit and Direct Credit validation and offered customers a multi-platform technology solution integrated with regular data updates drawn from several sources. The comprehensive nature of Bank Wizard, with its emphasis on superior customer service, has become the hallmark of all Experian Payments’ solutions and the defactor industry standard.
In 2001 as the growth in Internet banking continued, Experian Payments launched Bank Wizard for Bill Payments for the validation of remote bill payments. Today, Bank Wizard for Bill Payments remains the only independent validation solution for banks and EBPP(7) suppliers, capable of checking in real time that customers have entered valid customer account and bank details.
In 2003, as Europe introduced STEP2, its first Pan-European ACH and Regulation 2560 concerning cross-border charging came into effect, Experian Payments expanded its Bank Wizard product to provide support for the International Bank Account Number (IBAN) and domestic accounts in seven key countries. Egg Bank, its first customer in France and already a customer in the UK, benefitted from the advanced validation that Bank Wizard was able to provide.
A move into the payments processing market
Also in 2003 Bacstel-IP, the next stage of the NewBacs technology renewal programme, went live, starting the window for mandatory migration from the legacy Bacstel service. This saw every Bacs originator (most of the UK’s corporate organisations) replace their Bacstel solution with Bacstel-IP compliant software based on modern technologies.
In response to this opportunity, Experian Payments developed and launched its new and innovative payments platform, Experian Payments Gateway, which is now used to process over a third of the UK’s Direct Debit and Direct Credit transactions including utilities, insurance companies and bureaux. Interestingly, this huge volume of transactions comes from only 1% of the number of companies, underlining the fact that Experian Payments was able to anticipate and fulfil the needs of the largest and most demanding organisations.
The company’s international aspirations received a further boost in 2005 when the European Payments Council resolved that all euro payments in the EU must have a valid BIC and IBAN further strengthening the case for validation at the point of data capture. Experian Payments took up the challenge and increased the scope of its coverage to 46 countries, representing over 90% of SWIFT payments traffic, and integrated cross-border data into its Bank Wizard product to make it applicable to global banks and corporates.
At the beginning of 2006 as the migration program to Bacstel-IP drew to a close, Experian Payments was ideally positioned to start looking beyond the UK market and begin to address emerging payment issues in Europe with its core international offering, Bank Wizard. This strategy received a huge boost with the company’s acquisition in April 2006 by Experian, the ideal global partner with whom to bolster the company’s international growth.
With foresight characteristic of the entire Experian Payments story, Experian Payments Gateway’s architecture was also extended to support the UK’s Faster Payments initiative and the HST replacement programme for UK banks. This new architecture for Experian Payments Gateway makes it a truly global payments platform, a capability that, with the rest of the Experian Group, Experian Payments can now efficiently take to the worldwide market.
The first visible step in this strategy came with Experian Payments’ international launch last October at SIBOS, the world’s premier financial services event, which took place in Sydney. Here, the company presented a number of international solutions relevant to SEPA, BIC and IBAN validation and previewed SWIFT connectivity for corporates.
The company will be back at SIBOS this year - this time in Boston - with more announcements to excite customers and impress the industry. The Experian Payments story continues…
1. Payments Markets Statistics, APACS Statistical Unit, May 2007
5. Internet Monitor 9, APACS, November 2006
6. APACS, UK Bills: The Way We Pay 2006, p6
7. Electronic Bill Presentment and Payment
Please note - Experian Payments was formerly Eiger Systems, 1997-2006