Coronavirus quarantine creates a consumer use case for B2B billing tech
Due to the U.K.’s coronavirus lockdown, many British people are socially isolated in their homes, and rely on friends to get their groceries for them. They face the problem of how to reimburse people for their expenses, since cash is no longer acceptable.
These shopping services toe the line between P2P and B2B expenses, and thus may require a more full-featured offering than many P2P apps provide.
U.K. fintech Ordo is attempting to serve this niche by adapting its existing payment request service, which enables businesses and consumers to send bill payment requests — referred to as "smart requests" — through its platform. The new service is called Ordo Neighbour2Neighbour.
“In early March, we started thinking about the impact of the COVID-19 lockdown,” said Craig Tillotson, Ordo’s CEO. “We were going to launch our P2P payments request service anyway, but decided to change our focus to help the millions of people who are socially isolated."
Ordo was founded in 2018 by five former members of Faster Payments’ leadership team, including Tillotson, who was CEO of the real-time scheme from 2012 to 2018. In 2019, Nationwide Building Society invested in Ordo as part of its £50 million Venturing Fund.
For the duration of the U.K.’s social distancing and self-isolation period, people can send up to 50 Ordo Neighbour2Neighbour P2P smart requests free of charge per month. The service is also marketed to essential workers such as nurses who lack time for shopping.
"While there’s a big effort in local communities to get their shopping for them, paying helpers back isn’t easy," Tillotson said. "There’s a reluctance to hand over cash — and checks, in hygiene terms, aren’t safer than cash. Also, giving someone your card and your PIN so they can buy food for you is highly inadvisable.”
To use Ordo, a helper signs into the Ordo website or app, enters the mobile phone number or email address of the person owing them money, and sends them a payment request. They click on the link to their bank on the Ordo website or app, log in and specify which account the payment should be sent to. As proof of purchase, they attach a photo of the shopping receipt to the smart request, and provide the reason for the payment request.
Ordo uses open banking software from U.K.-based Yapily to enable the recipient of a smart request to send a payment from their bank account to a payee’s bank account through Faster Payments. It deploys end-to-end encryption to protect payment requests from hacking and fraud. Under the U.K.’s open banking regulations, authorized payment initiation services providers such as Ordo can initiate payments from consumers’ bank accounts with their consent.
An Ordo smart request contains the payee’s correct bank account title, but not their actual bank account number and sort code. When paying for their shopping, the payor doesn’t type in the payee’s bank account details, since Ordo uses open banking software to prepopulate the payment initiation page with the payee’s bank account details.
“We use open banking software to ensure the receiving bank account title is the official KYC’d customer name provided by the biller’s bank, and not a title made up by the biller,” said Tillotson. With its partner CGI, Ordo is marketing its service to corporate billers and small businesses as an alternative to direct debit payments for recurring bills.
“The personal economic impact of the COVID-19 shutdown is driving reasonably large numbers of consumers to cancel some direct debit arrangements,” said Tillotson. “These cancellations aren’t necessarily to completely stop paying for services, but are driven by consumers’ desire to take control of their financial outgoings when their income is less certain. The businesses we’re working with, want to provide their customers with alternative secure and simple ways to pay when direct debits aren’t acceptable.”
Tillotson says Ordo is the first company to launch an open banking-enabled request to pay service in the U.K. Pay.UK, the core payments infrastructure provider which operates Faster Payments, is developing a framework for request-to-pay services. The framework was due to be published on April 30, but was delayed due to COVID-19 .
“Mastercard plans to launch its Request to Pay service once the framework is published and our solution is accredited,” said Ellie Lewis, a Mastercard spokesperson.
When they worked at Faster Payments, Tillotson and the other founders of Ordo worked closely with the Open Banking Implementation Entity (OBIE), an organization set up by the U.K.’s Competition and Markets Authority to develop open banking API standards. This meant that they were able to ensure that open banking transactions leveraged Faster Payments’ irrevocable, real-time capability. Also, when Tillotson and his colleagues designed Ordo’s biller and payor service, they were able to leverage the original open banking API designs created by the OBIE.
“Throughout the Ordo design process, we used agile approaches to service design, developing Proofs of Concept, and getting user feedback,” said Tillotson. "Where we identified gaps or glitches with individual banks’ open banking implementations, we worked closely with them, Yapily, and OBIE to get the end-to-end journey right for our joint customers.”
Around half the banks Ordo is dealing with have had to make changes to their systems because Ordo was the first big user to test their payments initiation capabilities.
“The banks Ordo worked with responded quickly to our feedback,” Tillotson said. “For example, we told [digital-only bank] Monzo that the screen it presented to customers when they used Ordo for payment requests, didn’t display the right information. Monzo responded in a couple of days with a fix.”
Stefano Vaccino, Yapily’s CEO, said that Ordo's requirements were that the customer journey be as frictionless as possible, with no mention of any third parties to the customer, just screens from Ordo and the customer’s bank.
“We’re the technology enabler, operating behind the scenes and completely invisible to end users,” Vaccino said.