Beyond the Rail: Pay.UK’s Vision for a Multi-Money World| Ep. 011

In this episode Host, Louis Thompsett is joined by Justin Jacobs, Chief Policy and Engagement Officer at Pay.UK,  to discuss the future of digital money, interoperability of payment rails, trust, and security in a multi-money world. This episode explores opportunities, risks, and the evolving landscape of payments in the UK.

Key Topics

• Multi-money world and payment interoperability
• Opportunities in programmability and new use cases
• Resilience and diversity of payment options
• Trust, consumer protection, and fraud prevention
• Regulatory adaptation and industry collaboration

Host: Louis Thompsett
Guest: Justin Jacobs
Producer: Anaya McDonald
Editor: Anaya McDonald

Learn more about the latest payments insights: https://paymentexpert.com

Creators and Guests

Host

Louis Thompsett

Editor, Payment Expert

What is The Payment Expert Podcast?

Welcome to The Payment Expert weekly podcast, brought to you by SBC Media. Each week we analyse the news driving the global payments industry forward; the innovation, the infrastructure, and everything that has to happen to make it all possible.

Louis Thompsett (00:01.954)
Hello and welcome back to the payment expert podcast, your source for the latest news, insights and analysis on the payments industry. I'm Lewis Thompson, news editor at payment expert. And with me today, I'm delighted to have Justin Jacobs, chief policy and engagement officer at pay UK, who joins me today to discuss the future of digital money and what a multi-money world would or could.

represent. Justin, thank you very much for joining us on the show today. Before we begin, if you wouldn't mind just telling our listeners and viewers a bit about yourself, your role and the things you've been up to at Pay UK.

Justin Jacobs (00:41.575)
Sure, great. Well, thank you very much for the invitation to join today and good afternoon. So as you say, I'm Justin Jacobs. I'm our Chief Policy and Engagement Officer here at Pay.UK. So Pay.UK is the company that runs the payment systems that sit at the heart of everyday UK payments. So for me, my role covers the future of payments and how we help facilitate that. I look at operational resilience and how we make sure payments continue to flow no matter what.

And I handle our engagement with the market, making sure that we understand what the market wants and how we can best service it. And I've been here now for one year. It's been an eventful, interesting and challenging year. But I've been in payments now for about a dozen years in total. And most of that time before I joined Pay.UK, I was at the Bank of England where I worked on some of the payment strategy challenges there and also actually oversaw a lot of the firms in the payments industry. And really excited to be here at this time.

Louis Thompsett (01:37.678)
Absolutely. yeah, no, absolutely. And great to have you on with us once again, Justin. Let's talk a bit about a multi-money world as you word. I mean, you have now today sort of multiple payment realms. They all exist. They all have their set purposes and set designs for specific functions, I should say. And I suppose one of the issues today is connecting those

all together, that having that interoperability between the rails. So what are the biggest opportunities when it comes to having all these rails and conversely the risks, the challenges and the things that we need to do going forward to help mitigate those risks and challenges.

Justin Jacobs (02:24.177)
I think it's a really exciting time in the payments industry. We really feel like we're on the cusp of significant changes, significant opportunities. But yes, you're right, with opportunities always comes risk as well. And I guess thinking about opportunities, I'd probably highlight three distinct things. The first is I think that opportunity to have more payment options for people and businesses across the UK. And that itself means lots of different variety and choice. And probably a couple of things most excite me about that. The first is

that potential to have new use cases through programmability. So what is programmability? That's really all about linking the completion of the payment to a specific outcome. So it might be, for example, that my payment will complete when my purchase is delivered to me rather than me paying upfront and not knowing if my purchase will ever reach me. It's what I guess technically it's called delivery versus payment. And I actually quite like that because it does what it says on the tin. The payments occur.

when an agreed deliverable happens. And I think that's a real opportunity in the market to better service our customers. Secondly, I think it opens up this opportunity for more options at point of sale. Over the last 10 or 15 years in the UK, we have seen a decline in cash use and we have seen significant decline in checks. So if you're now going to shop online or in person, really the main option available to you are cards. And cards are a great product. There's no doubt about that.

Louis Thompsett (03:38.093)
Mm-hmm.

Justin Jacobs (03:50.941)
But I think it is good to have a wider range of options. It's good for merchants. I think it's good for consumers to have that choice. And I think as we develop new payment options together, having that new options at point of sale will be really important. And then thirdly, think around cross-border and how new technology, new initiatives can help make sure that cross-border payments can be faster, lower cost, and more predictable. So that's kind of one set of options, which is all about really important new use cases.

The second thing I'd emphasise is just that opportunity to even further enhance resilience. At Pay.UK, we sit at the heart of UK retail payments and touch wood, we run very resilient systems and that's not actually good luck, it's reflection of all the effort that we put into that. We process around 12 and a half billion payments every year. But notwithstanding that, it's always good to have more choice, more diversity of options.

Louis Thompsett (04:32.013)
You

Justin Jacobs (04:47.175)
And that enhances resilience in itself. So again, think actually opportunity through the changes we're going through to have more resilience in the ecosystem as a whole as well.

Louis Thompsett (04:57.259)
Yeah, sure. Absolutely. Good stuff, Justin. I mean, I suppose when you come to these new forms of digital money that we have today, there are all these diverse payment rails for if you're an organization approaching those, obviously, you want the optionality, you want the different rails to perhaps meet certain customer needs. But also it's about maintaining industry trust. mean, obviously, compliance is a key part of that. But it's about maintaining

trust too with the customers. do organizations do you think balance those, balance the need for more Rails, more options, but also maintaining that trust?

Justin Jacobs (05:37.747)
Well, let me say a couple of things on that. First of all, I think it's important as we think about what we present to customers and consumers, it's really important to focus on the use cases rather than necessarily the technology. And I think most of us listening to this probably are payment geeks. We love talking about how payments work. We love talking about how technology underpins that, whether that's through traditional forms of money or tokenized deposits or stable coins.

I actually not sure though that most customers care about those differences. I think what they care about is reliability, speed, cost and ultimately appropriate consumer protections. Trust and protections is at the heart of payments. So I think first of all, let's make sure, as I know everyone is trying across the industry to focus on those use cases as we talk to customers rather than technology. But in terms of those risks and things to think about.

Probably couple of aspects and you touch upon it in the question in fact. I trust sits at the heart of payment. So we need to make sure that we explain what those different payment options are, what the different consumer safeguards are that go alongside different payment options and making sure that we as an industry work collectively to prevent fraud from occurring. And if it does occur, making sure there's appropriate redress in place for that. So that's the consumer side. I think probably the other thing I would say is as

Louis Thompsett (06:57.003)
Yeah.

Justin Jacobs (07:01.743)
as the industry moves towards different forms of payment and change, is really thinking about migration risk. A lot of our payment systems, BACs for example, will be embedded in thousands of businesses up and down the country. if there's migration to new things, we need to get that right. And to be very clear, that's not an argument for not doing it. There's opportunities from change. But as we make that change, making sure that we think about how we do it safely and resiliently will be really important.

Louis Thompsett (07:30.549)
Yes, totally. And I suppose around that too, obviously, you know, the government governance, I should say, and the regulatory frameworks that underpin that need to sort of adapt to manage the unique risks of a changing multi money world ecosystem, as you were, as you would, sorry. So I mean, how do you think it needs to adapt? Is there any adaptation needed? And perhaps you do think is a sort of there tends to be a lag, doesn't there on

regulation catching up to the latest innovations. Do you think anything needs to change there to kind of boost that reaction to market innovation?

Justin Jacobs (08:10.675)
It's a good question. It's a tricky one in a way. In a way, I'd say everything changes and nothing changes. And by that, mean, risk professionals, as we look at payments in the market, I think it's important not to be bamboozled by that new technology or new forms of money. I do actually think that a lot of it means ask the same questions you would always ask. How does it work? What are the opportunities? What are the risks? What would happen if, you know,

Louis Thompsett (08:28.17)
Yes.

Justin Jacobs (08:38.483)
and then come up with your range of scenarios that you might worry about. Whatever the underlying technology, whatever even the underlying asset classes and things like that, actually those questions get at the heart of it. Asking good open questions and then probe. Be curious. Don't let the new words of a particular new technology confuse. Just keep probing and ask the questions that you would ask, even if it's something you were familiar with, because it will still be valid questions, I think, on the

And I would say on regulation, can it keep pace with innovation? Yes and no. What I would say personally, and having been a regulator on one side and now more in the industry, is don't wait for regulation. Actually, good risk management sits at the heart of our industry, wherever we sit, and particularly for those of us who work in the risk area, don't wait for regulation to have the answer. Think through the risks. And if you're managing risk well, on the whole, I'm pretty confident you'll be meeting regulatory expectations.

Louis Thompsett (09:38.913)
Yes, totally. Sound advice, obviously innovate from a regulatory standpoint as well as obviously in your technology solutions and different rails, et cetera. We mentioned interoperability earlier, but it's not really worth having interoperability unless it's seamless and things move between rails sort of invisibly and quickly for the user or the person making your payment. How, or suppose why is it important to...

it is that seamless interoperability, particularly when sort of building industry confidence and preventing any fragmentation between the realms or walled gardens, as it were.

Justin Jacobs (10:19.515)
Exactly. I think Wolf Gardens is a great expression about the risk and the challenge there. Because I think both from an industry perspective and from an end user consumer perspective, that interoperability is really, important. I don't think end users want money that is unreliable. for example, if a stable coin sits behind a payment transaction, it's going to be really important to those consumers that that is redeemable at par. By that, I mean you can cash out your one pound sterling coin.

and turn that into one pound in your bank account. You don't want risk there that won't happen. And you want that to happen seamlessly and cheaply and quickly. And I think the ultimate vision that the various of us in the market are talking about is that ability to move in and out of different forms of money seamlessly. So, you know, I could buy something through the post using e-commerce. There might be an account to account transaction, but actually using perhaps a tokenized deposit.

so that it's programmable and the money only is confirmed when the product arrives at my doorstep. But the merchant might then get that tokenized deposit and want it in traditional forms of money and that can seamlessly happen all behind the scenes. So I think if we're going to get to that sort of world, I think it's really important for organizations like ourselves in Pay.UK that we work with the market to define those interoperability standards so that from a user perspective, from a market perspective.

it is easy to transition out of those different forms of money. And I think for the industry, from that industry perspective, it is also important in terms of managing liquidity. You don't want to have separate liquidity pools for traditional forms of money to a tokenized deposit, for example. That risk becoming inefficient and extra cost for the industry. So how we can manage that in one pool so that banks can move money around easily without having to have separate pools with different sorts of payment systems, I think will be important.

Louis Thompsett (11:58.73)
Yeah.

Louis Thompsett (12:15.69)
Yes, of course. And I suppose when you don't have that interoperability between realms and there's fragmentation there, it obviously leaves gaps for fraudsters and fraud to scale, particularly with new realms as well, new technologies that also sees fraud rise. So anti-fraud strategies is obviously a key part to evolve alongside the interoperability and the realms.

Justin Jacobs (12:25.747)
Thanks.

Louis Thompsett (12:41.856)
particularly when it comes of course to protecting consumers and maintaining trust in the payments landscape more broadly. So, I mean, how are those fraud strategies evolving today and what more needs to be done do you think?

Justin Jacobs (12:58.513)
Yeah, and I think Ford is a really another important topic that actually in the payments industry, we sit at the front line of that debate. And I think the first aspect has to be prevention as much as we can and supporting consumers to help them avoid these scams. And something we will take for granted now, confirmation of payee. know, when you want to make a payment to someone for the first time and you type in their details and actually your bank will confirm to you.

that they are who they say they are, that that is the right account details is really important. It's hard to imagine that actually, you know, a while ago that didn't exist. And I know I find it so reassuring when I do that, that I know it is the person I think it is. And indeed, obviously, if I've made a typo, that that is corrected. So that side of things is really important. But also, I'm really excited about initiative. We're in the process and about to launch around data sharing.

Louis Thompsett (13:46.274)
Yes.

Justin Jacobs (13:57.259)
having more data sharing across banks and PSPs to enable earlier detection and intervention through our enhanced data exchange program. We've been really closely with the markets on that and we've been developing that concept. I think we're now ready to start rolling that out, working with the market to do so. And I think that can be really valuable to help banks and PSPs be able to say to their customer, are you sure that this person is who you think they are beyond just account details to actually have some fraud markers on there.

And I think that's a really exciting innovation. And just being part of the market that is doing so much to educate consumers about scam tactics, I think is really good. And of course, while that prevention is really important, and we absolutely want to see that step up, we do need to make sure that there is recompense available if people have fallen through scams. And I do think things like the Authorized Push-Payment Reimbursement Regime,

Louis Thompsett (14:53.089)
Yes.

Justin Jacobs (14:53.731)
know, play is an important part in that. And, you know, we're pleased to operate that with the industry to help make sure that we protect consumers where necessary.

Louis Thompsett (15:03.166)
Yes, totally. Another interesting thing, which I think perhaps gets a little under discussed, should we say is obviously the role of, you know, particularly when comes to anti fraud measures of that cross collaboration between sectors. had Samantha Kitefoot from GSMA on here a couple of weeks ago, and she works in the mobile industry and just seeing how, you know, SIM swaps and things like that help when it comes to financial services too. So do you think part of that?

Justin Jacobs (15:20.541)
Yes.

Louis Thompsett (15:31.932)
security around payments and rails. also extends to things like the mobile networks. A lot of frauds originate on social media, perhaps, and perhaps that's a whole other conversation entirely. But, you know, having that collaboration in general is going to be important when it comes to the future of money.

Justin Jacobs (15:52.411)
Yes, no, I think that's absolutely right. And, you know, clearly, it's a it's a big public policy debate still about where, you know, where funding should come from for reimbursing people who have suffered from scams. But I look at it from the lens of we are only as good as our weakest link ultimately. So we do need to work together both across the payments ecosystem and as you say, with other adjacent sectors to really try and make sure we can identify the causes.

Louis Thompsett (16:10.624)
Yes.

Justin Jacobs (16:20.851)
of these scams, why they are succeeding and try and clamp down on them more, working together. And I think more broadly, when we think about cross-setter collaboration, looking at that payment flow from end to end and working together to see how do we enhance the security from a fraud perspective, enhance the resilience as well from that perspective to keep payments flowing. think payments have got so much more complicated over last 10 or 20 years.

when perhaps it might just be a few large banks really using the same set of infrastructure. That was simple. We now have a much more innovative market, a much more dynamic market, which I think is great, but it doesn't require that really careful end-to-end management of the payments chain, which we need to all work together to make that happen.

Louis Thompsett (17:08.65)
Yes, absolutely. And I mean, we've been speaking about the technology quite specifically, but beyond that, are there any behaviors or expectations that are shifting the influence and how does that affect the way we need to think about, I suppose, building trust in the future of payments, know, outside of the technologies or anything, whether it's the way the industry approaches things, challenges, etc. What would be your advice?

Justin Jacobs (17:35.603)
I mean, I think what we've really seen, I think, over the last 10 years is in line with, think, across the economy, that consumers expect things to be seamless. They expect things to be available 24-7. And when they're not, we hear about it really quickly on social media. That, think, is really being transformative. And if you're running a big payments operation, actually, for some,

Louis Thompsett (17:48.682)
Yeah.

Justin Jacobs (18:00.017)
perfectly understandably, sometimes the first you might hear of a problem might be through social media because that happens so instantly from a small scale, but people start commenting on it. So I think that just plays back to the actually importance of operational resilience because consumer expectations are changing all the time. And actually one of things that we're working on with the industry is how do we really put in place those early warning indicators effectively, trying to spot the instance almost before they even happen.

finding those really valuable lead indicators which might say, okay, there's something that's not quite working right, hasn't crystallized into a problem yet. And that gives us that time to work out where that is and try and put that right. And then for other things, making sure they are detected really, really quickly. And I think consumers have proven that their expectations are going up and rightly so, and us as an industry and others across the economy, I think, really trying to step up to meet those increasing expectations.

Louis Thompsett (18:58.752)
Yes, absolutely. Well, thank you very much, Justin, for speaking to us today. Some great insights. Before we go, any last words of advice if you're an organisation or a firm out there who's looking to scale payments or add more optionality in, what would be your advice broadly from the pay.uk stamp?

Justin Jacobs (19:19.131)
Yes, thank you. Well, I think probably a theme of what I've said is we are on the cusp of a really significant period of change. I think it offers huge opportunities for businesses and for consumers to have better payments experiences. But as we do so, it's important that we maintain the really high levels of operational resilience and appropriate consumer protections that we've made the norm and make sure that those continue into the future and continue to enhance.

so that we can meet the needs of the people and businesses across the country.

Louis Thompsett (19:50.604)
Absolutely. Well, thank you very much, Justin. Unfortunately, that's all we have time for today, but thank you again for joining us. If you've been watching or listening and you're not already subscribed to the Payment Expert podcast, make sure to subscribe wherever you do get your podcasts with plenty more insights and analysis coming up in the weeks and months ahead. And for the latest news as it happens, simply head over to paymentexpert.com. We'll see you next time.

Justin Jacobs (20:16.861)
Thank you very much.