You can bank on a dynamic future for payments

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The UK is among nations leading the way in modernisation of payments, according to the 2015 McKinsey Global Payments Map. Banks have the largest share of profits from the payments market, largely due to Visa and MasterCard. They derive more than $1 trillion (£770bn) annually in revenues from payments exceeding $400 trillion worldwide, Boston Consulting Group estimated last year.

However, they face a challenge to their market shares and margins from innovative fintech entrants, some offering more efficient payment systems that hold out the prospect of lower transaction charges to consumers.

In London, new entrants include peer-to-peer money transfer service TransferWise, while Scottish companies are also in the vanguard of change.

Among Scotland’s larger financial institutions, RBS’s Innovation Engineering team has been working to develop a better cross-border payment clearing and settlement mechanism based on the use of a blockchain, distributed ledger technology.

A UK-based subsidiary of Ingenico Group, France, makes handheld, chip and PIN card payment terminals at its 400-employee plant in Fife. It recently won a contract extension until 2020 to supply secure instore, online and mobile payment acceptance solutions to more than 300,000 customers of London-based payment processor Worldpay UK.

Further down the employment scale, NCR Edinburgh’s digital banking centre in the city began life as mobile ticketing software startup Mobiqa before US global giant NCR acquired it in 2010.

Since then, head count has grown from around 15 to 120, and continues to increase as the Edinburgh subsidiary assists its global parent’s transition from being a financial hardware supplier to become a major fintech player. NCR Edinburgh is modernising how customers experience banking services across all channels including ATMs, branches, kiosks and tablets. Though it finds daily answers to the increasingly complex ways in which payments are handled, much activity still involves hard cash, dominant in large areas of the Middle East and Africa.

Alan Rae says NCR Edinburgh is modernising banking services throughout all channels.
Alan Rae says NCR Edinburgh is modernising banking services throughout all channels.

“There is still a huge demand for cash media handling services, so we are working to help make this happen in a more secure and reliable manner,” explains Alan Rae, an engineering manager at NCR Edinburgh.

The operation’s reputation for successfully working on transformative projects saw NCR transfer a mobile banking operation from the US to Scotland to co-locate: further proof that the city has a sufficient pool of the right level of skilled, experienced people to staff such operations.

In line with Edinburgh’s cosmopolitan feel and the recruitment priorities, NCR Edinburgh is a very relaxed place, with a hint of California about its free breakfast and fruit daily, and cakes to accompany talks about coding. “We need to do this as there are a lot of exciting fintech companies in Edinburgh and we want the talent to come to us,” Rae says.

Among recent start-ups, Comcarde, an early-stage company based at Livingston near Edinburgh, has developed Bridge, a secure payment system that means buyers and sellers never exchange sensitive financial information. The company raised nearly £2m in seed funding and was planning to launch a series A funding round this year to expand head count and launch Bridge in the UK.