How Ecospend is reshaping payments in the Public Sector

Ecospend, a key innovator in the Open Banking industry and now part of the Trustly group, has become a pivotal force in transforming public sector payments across the United Kingdom. The company's proprietary Pay-by-Bank technology enables instant, secure account-to-account transactions, setting a new standard for efficiency and security in financial services.

 Open Banking in the UK has witnessed an unprecedented surge, facilitating 11.4 million transactions in a single month and growing payments by 500% over the past year. Lord Chris Holmes, an adviser to Ecospend and a staunch advocate for Open Banking, forecasts a significant turning point in the near future. "In the next 12 to 18 months, we are likely to see an inflection point for Open Banking payments, with mass consumer and merchant adoption," he stated in a recent interview with City A.M. This anticipated shift points to a broader acceptance and integration of Open Banking, poised to revolutionise financial transactions by making them more accessible and efficient for both providers and users.

HMRC's adoption of Pay-by-Bank

In late 2020, HM Revenue & Customs (HMRC) sought to upgrade its payment processes by embracing Open Banking, aiming to simplify taxpayer transactions and achieve significant cost and efficiency savings. Through a tender process Ecospend emerged as their winning provider over a field of blue-chip organisations. This win not only marked a significant milestone for Ecospend as a fintech startup but also set the stage for what would become a benchmark use case for Open Banking in the public sector globally.

 HMRC became the first central government department in the world to integrate Open Banking, pioneering the adoption of account-to-account (A2A) payments. Beginning with the integration of Ecospend’s Pay-by-Bank technology for self-assessment payment journey, the initiative expanded to include other major tax payments such as VAT, PAYE, and corporation tax. The adoption of this technology by HMRC represented a major shift in public sector payment processing, moving away from traditional card payments to more direct and efficient A2A transactions facilitated by Ecospend’s Pay-by-Bank solution.

 Ecospend facilitates over 40 types of tax payments, pioneering the world's first Open Banking solution for government. The implementation of Pay-by-Bank has significantly refined HMRC’s payment processes, making it a user-friendly payment method available in the public sector. This system not only streamlines cash flow management by automating reconciliation but also eliminates unnecessary transaction costs, thus offering a dual advantage of cost reduction and enhanced operational efficiency.

 HMRC renewed their contract with Ecospend earlier this year. Therefore, Ecospend will continue to offer its Open Banking solutions to enhance parts of HMRC’s payment processes and deliver innovative data solutions for taxpayers.

Expanding public sector efficiency with Open Banking

The introduction of Ecospend's Pay-by-Bank technology by HMRC has set a significant precedent for the future of financial transactions within the public sector. Recent data from HMRC highlights the system's success, with over one million tax payments processed in January 2024 alone, totalling a staggering £3.2 billion. On the final day of the month, nearly 127k payments were made, underscoring the trust in this new technology by taxpayers who appreciate its ease and efficiency.

 The seamless and intuitive user interface of Pay-by-Bank aligns with the public's growing preference for quick and hassle-free transactions. Organisations are taking note, with some of the most trusted names in the UK, such as NS&I, ITV, and Hargreaves Lansdown offering Pay by Bank to their customers. This shift is part of a broader movement within the UK's public sector to modernise and streamline financial operations, evidenced by Ecospend's inclusion in Crown Commercial Services’ Dynamic Purchasing Service. This inclusion allows all public entities to integrate Pay-by-Bank effortlessly, enhancing financial services across the board.

 A PIS and AIS-licensed entity, Ecospend offers tailored and white-label solutions designed to meet every public sector need. The hands-on implementation can take anywhere from 1 to 10 weeks depending on the client. All of this is backed up by robust bank-grade security ensuring a safer financial environment across the public sector. In 2023 alone, Ecospend processed 10.5 million transactions totalling £16 billion, demonstrating its capability to handle large volumes at a fraction of the cost associated with traditional card payments.

 Lord Chris Holmes, commenting on the transformative impact of Open Banking, stated, "HMRC's adoption of Open Banking-based payment methods is a prime example of how this technology can profoundly benefit society. It improves customer experiences through streamlined processes while also playing a crucial role in combating the financial fraud affecting our public sector. This is about more than innovation—it's about paving the way for a fairer, more efficient, and secure financial environment for all."

 As the most developed Open Banking market globally, the UK's public sector is leading by example. The relationship between Ecospend and HMRC over the past three years has catalysed a departure from older legacy systems, embracing a technologically advanced approach that promises greater efficiency and reduced fiscal strain. This shift not only represents a significant advancement in public financial management but also sets a benchmark for others to follow, ensuring that the UK remains at the forefront of financial technology innovation.