Charitable giving and the issue of “third sector” payments probably doesn’t get the attention it deserves from the financial services side. Charities have particular and in some cases unusual requirements around payments but most of them share a desire to make the process of giving frictionless and painless. For that reason, Comic Relief and other charities are very interested in a variety of emerging payments options out there and especially interested in the opportunities around the mobile. But there’s a particular issue around charitable giving in the UK because of the thing called “gift aid”. When UK taxpayers donate to charity, the charity can claim tax relief at the basic rate. So if I give a pound to charity the charity will actually get £1.20 provided that they can show to the tax authorities that I am indeed a UK taxpayer and that I paid more than 20p in tax last year.
It occurred to me, and other people too, that if some of the new payment systems under design right now could be “nudged” to deal with this particular requirement of the charity sector, including gift aid in their design somehow, then we (i.e., the payments industry) would have a genuine win-win to be proud of. For a relatively small cost we could generate a lot of additional money for charities. The Payments Council have been extremely supportive of this idea and I hope I won’t embarrass Miles Cheetham by singling him out as having done a terrific job in talking to the stakeholders — including Unicef, Verizon and Her Majesty’s Revenue and Customs (HMRC) — to open up the conversations. There has been real and significant progress at that level. Example: the HMRC “proposal 4” on digital platforms would allow for organisations to remember gift aid declarations. Therefore one might imagine Braintree style back-end payments integration which matched the proffered identity and the device to attributes on file to bundle the donation, the declaration and the personal details in an appropriate form (i.e. in a usable open data format for customers so that they can generate one simple report to fill out tax return at the end of the year and as PDFs on a CD for posting to the HMRC).
So to the technology forum. After an initial talk by Amanda Horton-Mastin, the Innovation Director at Comic Relief, we broke up into smaller groups to discuss the problem from different directions and come up with some ideas and we then reassembled to share the ideas in the traditional fashion.
My preferred solution would be to either add gift aid eligibility as an attribute to a financial services identity (but since no one is listening to my idea about a “money name” I think we will call that Plan B) or to create some sort of “charity name”. So just as my twitter name is at @dgwbirch and my Facebook name is [redacted] and my PayPal name is email@example.com, so why couldn’t I create a charity name, say “»dgwbirch” and use that? We discussed a number of ideas around creating an infrastructural solution to support the immediate requirements of the M S (the (mobile front end to the Faster Payments Service), under development by Vocalink and PayForIt, the cross-industry direct-to-bill solution, but obviously any solution that we came up with would have to be available to other payment solutions. I should note that we had representatives from the “new” payments world (e.g., Paddle) as well as representatives from the mainstream at the meeting.
My take on all this is that it is an identity problem, not a payments problem. Therefore the right place to look for a solution is in the emerging identity sector and I rather bullied our group into agreeing that we should talk to the Governments approved identity providers (there are eight of them in the current IDA framework) to see if they might be able to provide a federated ID solution so that eligibility for gift aid could be determined automatically as part of the payment process. The idea of course is to stop requiring customers having to fill out gift aid declarations which in many cases they either don’t do or can’t do. A couple of the identity providers attended the meeting (Experian and PayPal) and I’m looking forward to seeing their feedback on some of the ideas that were raised.
Without stepping into more controversial territory, but in the interests of public understanding, I should flag up that the Payment Council’s previous attempt to build a bridge between the payments world and the identity world (what was then known as Project Gaia) didn’t get terribly far and so I think I sense a natural reluctance to want to dip a toe in that particular water again, but chatting to one or two people after the meeting I got the feeling that the time might be right to start work on the foundations of a new bridge. Identity has become such a problem (identity fraud is half of all fraud in the UK at the moment) that the need for a co-ordinated payments industry roadmap is now pressing.
I was very pleased to see that Miles had put up the suggestion of coordinating a discussion with the identity providers as one of the proposed next steps I have to say that I strongly support this idea and I hope to support to forthcoming discussions in a useful way.
This is a terrific opportunity for the UK payments industry to do something really good with little effort and marginal cost. Many thanks to Intellect and the Payments Council and the payments organisations that came along for contributing to a worthwhile and productive set of discussions.
These are personal opinions and should not be misunderstood as representing the opinions of
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