Are PSPs underserved by their banking partner? Now they don’t have to be…
17 September 2018
Since the end of foreign exchange controls in the UK in 1979, there is no official mechanism for recording international monetary transactions. It is therefore difficult to obtain information on the numbers of international payments and the amounts that are sent from the UK. Information is generally gathered from numerous sources, and while these differ, they all consistently point to the UK as one of the top 10 remitting countries in the world.
To support these payments there is a vibrant payments service provider (PSP) industry, also known as money service businesses, operating in the UK. It is estimated that there are four times the number of PSPs in the UK than France, Germany, Italy, Netherlands and Spain combined. They come in various shapes and sizes, ranging from niche start-ups to large enterprises with international footprints.
They undertake payments for migrants sending money home to their families and communities and make payments for small businesses with lower sums who do not want to incur the large minimum charge made by the major banks. They also execute settlement remittances that relate to card transactions that provide shoppers and overseas visitors with a fast, convenient and increasingly seamless payments experience. These PSPs are motivated by delivering a faster, better user experience.
But what about the banking partners that the PSPs use?
In the process of de-risking after the financial crash, the UK’s high street banks left many PSPs and MSBs (money service businesses) without bank accounts to support their services from. Many of these companies were notified that they had just three months before their accounts would be closed. De-risking is the term given to the closure of bank accounts where the perceived financial and reputational risk of operating those accounts outweighs the overall benefits.
De-risking has been used by some banks as an excuse not to serve this sector at all. The PSP and MSB market has been especially hard hit.
BFC Bank, one of the latest banks to launch in the UK, has grasped the opportunity to offer services to these clients who remain underserved by the banking industry because of de-risking. “Banking is full of rules and regulations,” explains David Price, CEO of BFC Bank. “However, while BFC Bank operates to the same high level of compliance as every other regulated entity it will not hide behind these as a reason to avoid doing business.” BFC Bank, owned by BFC Group, which has a 100-year trading history, is an encouraging new specialist provider that offers reliable, safe banking services to PSPs and MSBs.
“We also operate our own PSP and have a long history in the money transfer and cash collections business. So we are acutely aware of the issues companies in these markets have – issues made even more difficult when the banking industry withdraws its support for these businesses,” continues Price.
“It is our intention to partner with the companies in these sectors and offer not just a service, but also solutions to their everyday problems.”