Crown Commercial Service (CCS) has set up a commercial solution aimed at reducing fraud and improving prompt payment across the public sector.
Named the Open Banking Dynamic Purchasing System (DPS), it is the first of its kinds from CCS, giving public sector organisations access to a suite of open banking services and account-to-account payments under one agreement.
CCS said it could reduce the relevant payment costs for organisations by up to 80% and reduce fraud and error in payments.
The DPS will off customers three types of services. One is to allow them to make or receive payments digitally without the need for bank cards, and the second for supplying account information, with users’ consent, as part of processes such as fraud identification, income verification and identity confirmation.
The third is confirmation payee services, which involves checking on names or accounts to verify individuals and/or organisations.
Suppliers will be able to join the DPS at any time over its eight-year lifespan.
Data sharing
Open banking services allow for read-only financial data to be shared between banks and third party service providers, which can be used to provide alternative payment methods and assist with wider financial capabilities. These services are designed to digitise and streamline traditional banking practices.
Instead of relying on card payments, organisations will be able to receive payments in real time, removing many of the fees and delays associated with traditional payment methods. Debit card payments incur varying processing costs in the UK, but open banking negates these fees to leave plenty of scope for savings.
CCS said the information shared as part of the open banking process can also help reduce the volume of fraudulent or in-error payments made throughout the public sector by confirming or denying the identity of account holders. This will unlock the ability of open banking to clamp down on fraudulent activity, including false tax and benefit claims, which in turn will create significant savings.
It added that, while open banking is a relatively new market that has not yet had the chance to fully realise its potential in the public sector, its market engagement and research has established that there is vast scope for its use. It is expected that it would be able to provide improvements such as a more accurate understanding of personal financial circumstances, which would enable more precise assessment of means, and allowing vulnerable members of society to receive vital payments more quickly.
First of its kind
Simon Tse, CEO of CCS, said: “We’re delighted to be launching the first comprehensive open banking agreement in the public sector, offering significant savings and vital innovations in financial capability. This solution is built on extensive market engagement with a range of providers, from major banks to fintech start-ups and government institutions.
“The flexible agreement reaffirms our commitment to providing maximum value to our customers and opens up opportunities for a diverse spectrum of suppliers in an exciting emerging market.”
