Is Paym a failure?

Is Paym a failure?

This week UK mobile P2P payment platform Paym published its latest figures on user uptake and transaction volumes. Hakim Mendjeli, former head of mobile product and strategy at Lloyds Banking Group, sifts through the data.

PayM has published its statistical update running to the end of 2015. I have listed my key take outs below.

PayM growth has slowed down substantially

We can see that the rate of growth of registered users has decreased in 2015. There have been 139k less registrations in Q2 2015 vs Q2 2014, i.e 18% less registrations (see graph below)


17% of mobile banking users are registered to PayM?

As of end of 2015 the Paym registrations stand as just above 3M.

So is that big or small? Let's do some rough maths. I think there must be circa 18M mobile active banking users in the UK. Hence that means that ~17% of UK mobile banking users have signed up to Paym. That's not bad really within a 2.5 years period.

Average transactions value down by 11%

Average transaction value has decreased substantially in the last quarter of 2015 - according to PayM it's due to the volume of transaction increase.

Low number of transactions per users

The average number of transactions per registered users is growing on a quarterly basis, but remains very low. In view of how active mobile users are, 0.26 transactions every 3 months per registered users is not very much. I suspect that many registered users are inactive, it will be interesting to see if there are indeed users that love paym so much that use it when they can avoid using another payment method. (note: I don't believe this to be the case)


PayM is still a marginal payment method. There might be 17% of mobile users registered, very few of them bother using Paym it seems. Is Paym a failure considering the substantial amount of money it has costed bank to implement? Or do you believe that it will emerge as a credible payment method for a niche set of users and usage scenarios? I tend to lean to the former at this stage based on the set of publicly available data points.

So Paym is definitely not a success, is it a failure? That might be a bit too harsh at this stage, we need a couple of more quarters to assess.

I am interested to hear your perspective on this.

You can find the fully Paym stats here.

Hakim is available for interim roles and consulting projects on digital product management, strategy, proposition development and transformation in Fintech and retail banking. He led mobile strategy and product at Lloyds Banking Group. More recently he was in charge of digital strategy and propositions for small business at RBS. He is also founder @FrenchDigital.

Comments: (22)

A Finextra member
A Finextra member 11 February, 2016, 09:531 like 1 like

Like so many payment 'innovations' Paym is a technology solution looking for a problem.

The regrettable fact, however, is that gimmicks like Paym distract the industry and regulators from the fact that consumer-driven innovation (as opposed to top-down bank imposed innovation), doesn't get a chance to get off the ground

A Finextra member
A Finextra member 11 February, 2016, 10:362 likes 2 likes

@Simon - spot on.
Directives like this (and account switch) are a big stick approach to encourage use and adoption. Solutions looking for perceived problems.
Just by making something easier doesn't mean it will get adopted or drive up usage.
I haven't heard anyone say "Oh I wish i could *switch accounts/send payments more easily" (*delete as applicable)

First world problems eh?

Joss Wilbraham
Joss Wilbraham - WMG Consultants Ltd. - Oxford 11 February, 2016, 10:58Be the first to give this comment the thumbs up 0 likes

Thanks Hakim. You are correct in highlighting the poor take up of the PAYM Service; a significant part of this can be attributed to the poor marketing and dependence on mostly clunky, mobile banking platforms. That said, the industry now has a database which can be enhanced and used for other purposes. One obvious use case would be to mandate its use prior to the origination of Faster Payments (to check the beneficiary details prior to processing), thereby reducing misdirected payments.

Bradley Howard
Bradley Howard - Endava - London 11 February, 2016, 11:421 like 1 like

@Simon - I always thought PAYM was trying to replace cheques as a key person to person/ person to small business payment method.

The user experience provided by my bank is awful. At home we tried to pay a plumber with PAYM and the money was stuck in the ether for weeks - which annoyed the plumber and ultimately us (the customer). The plumber has since returned to cheques.

The onboarding process (I use a different bank to my plumber) is terrible by comparison to other technology companies - it desperately needs a user experience revamp and simplification.

Only then, it might become more successful.

A Finextra member
A Finextra member 11 February, 2016, 12:34Be the first to give this comment the thumbs up 0 likes

@Bradley - That is exactly my point.  Cheques actually work very well for customers.  I realise that they may be expensive for banks to process, but the advent of cheque imaging later this summer will deal with that.

Paym was a vanity project for some in the industry, it was not developed with customers as the first priority.


A Finextra member
A Finextra member 11 February, 2016, 14:02Be the first to give this comment the thumbs up 0 likes

As a 'registered user' of PayM, my my first experience of it was awful. While demonstrating how good (and instant) it was, I transferred a sum to a colleagues bank account (which he received instantly), but when he tried to transfer it back to me, he couldn't do so!  Thank goodness for cash!

Now it just never occurs to me to use that route to pay anyone. I just transfer funds directly to their bank account.

Note to oneself : I must try harder! 

A Finextra member
A Finextra member 11 February, 2016, 14:201 like 1 like

Thanks for your comments, it's great to see that people are interested. We can all agree that the numbers aren't great.

The follow up question is why?

a) Bad proposition: the need didn't warrant the efforts involved

b) Bad execution: A good proposition poorly thought through?

My view:

* The proposition wasn't compelling enough vs other modes of payments to warrant the efforts involved. It felt more of a push proposition rather than responding to a customer pool.

* The execution of the proposition hasn't been great.

My gut feeling is that paym might have a place as a mean of payment, and I hope they are actively assessing what are the fix that are needed. That being said, in view of all the other areas where banks can innovate to improve the financial lives of customers, is paym a priority?

probably not..




Rakesh Lakhani
Rakesh Lakhani - JPMorgan Chase - London 11 February, 2016, 14:41Be the first to give this comment the thumbs up 0 likes

It's very interesting to see that the trend in the comments is that paym just isn't easy to use. Don't think anyone will disagree that the there is most definitely interest from the people for P2P, Venmo have succeeded, Vipps in Norway has exceeded its uptake by 5x their initial prediction. In my view, Paym was the platform for the banks to offer P2P and avoid being disintermediated by Venmo, Facebook, PayPal etc. They just haven't done it. At its launch there was some press but the front ends weren't ready. As it has progressed I see my bank (Lloyds) has taken steps to make it a more accessible service but it is still several clicks to get there and zero integration with the mobile device to easily find a contact, invite one to sign up or easily see who is on Paym and who isn't.
I haven't personally used the service, though I have signed up. I tried to use it once but the person I wanted to send money wasn't on there and I had to go back to finding their bank details. The reports in the comments of its failures in successfully sending money are the absolute worse thing for it.
The payments world is driving for frictionless payments, though to be successful they must be relevant and reliable. Paym is neither right now, not because the central solution is flawed but the way it has been exposed. It is in need of a re-launch but looking at the customer journey first. I for one would happily have one app than I can pay everyone, rather than needing to register with multiple different apps to get reach.

A Finextra member
A Finextra member 11 February, 2016, 14:52Be the first to give this comment the thumbs up 0 likes

@Hakim - I think you are spot on.  There was not enough consumer demand, there were alternatives that worked well for consumers and Paym was executed poorly.  The key thing is that it was intended to solve a problem for the banks, not a problem for consumers.

@Rakesh - I don't think comparisons with Scandinavia stand up.  There the banks were often able to remove payment options to force take-up.  In very few markets has P2P really taken off, mostly because the public is happy with the products they already have.  The banks should focus instead in finding out what customers really need (Psst, I think it might be branches and really good, personal service)    


A Finextra member
A Finextra member 11 February, 2016, 15:03Be the first to give this comment the thumbs up 0 likes

Is it PayM the service, the way our banks animate it on our mobiles, nobody knowing about it or that it just isn't needed in our lives?

From the comments above, it sounds like a combination of them all.

PayM is a simple overlay to Faster Payments so as a step change it should have been easy for te industry, but it does rely on the banks to provide our access route. If there is any clunkiness it is probably more in the app space than the core utility.

Paym is only as good as the way the banks deliver on it, and they appear to be confused to the point that they have let ApplePay and the others in.

None of the banks have advertised it much and all the central marketing money is going on an account switching service that few feel inclined to use.

Is there a need? I live in the middle of one of the rural areas where cheques are still common, but no-one says "just Paym me", they might say "send it by Faster Payments when you get home" or, horror of horrors, "give me a cheque" (even if it is a 20 mile round trip and £2 parking to pay it in). 

A Finextra member
A Finextra member 11 February, 2016, 21:37Be the first to give this comment the thumbs up 0 likes

@Hakim - you hit the nail on the head regarding the proposition and its poor execution. Since the introduction of Faster Payments there has been many debates about the slow speed and/or the lack of innovation of overlay services on top. 

On a related theme, we recently debated with some organisations about the relative merits of introducing a Faster Payments type system over the pond, and the extent to which the UK Payments industry has exploited the opportunity to innovate and provide overlay services on top of FPS since its introduction in 2008. An interesting discussion followed, on the right dynamics and conditions required to allow innovation to thrive on what would be a shared infrastructure and what would have be  achieved through effective collaboration amongst all the market participants.

But as Denis and others point out, the Banks had a great opportunity to provide a really great customer experience and tell everybody about it !! But it can be done. Pingit as another example, isn't bad.  There is then the perennial problem of reach. With new entrants and challenger banks without direct access to Faster Payments although as we know moves afoot to solve, perhaps only then we will see real innovation.

Jeremy Light
Jeremy Light - pingNpay - London 11 February, 2016, 23:10Be the first to give this comment the thumbs up 0 likes

This analysis is a little "glass half full" - the key figures in any new payment system to look at are transaction growth rates. Paym transactions have been growing at over 40% per quarter since Q2 2014 (with the exception of Q2 2015 at 16%), which equates to almost quadrupling each year. It is too early to tell if this will be sustained, but the momentum is there.

Contactless card transactions were in a similar position 5 years ago - volumes were low giving the perception of failure, but in fact were consistently growing at 200% - 300% p.a, and now they are in widespread use, with probably over 1bn transactions over the past 12 months in the UK.

Addressing databases such as Paym are a critical component in digital payments to route payments in a convenient way. Currently, Paym is only useable in banking apps, but with access to FPS opening up, the scope for third parties to innovate using Paym is substantial. For example, look at the success of Venmo (USA) in linking social media with mobile payments.

A Finextra member
A Finextra member 12 February, 2016, 06:40Be the first to give this comment the thumbs up 0 likes

Try this simple experiment.  Ask 10 people who don't work in tech or banking "have you heard of PayM"....I believe you'll quickly work out the problem.

A Finextra member
A Finextra member 12 February, 2016, 10:21Be the first to give this comment the thumbs up 0 likes

Totally agree with Dharmesh.  I couldn't wait for PayM to launch at my bank, and I often need to pay or receive money from friends after meals etc., but every time I ask if they can use PayM, they look at me blankly (and we are mostly in banking, IT, or both!).

The concept of needing a branch and personal service to give a mate forty quid made me laugh, but I guess the reason the banks haven't bothered to market this is because there's no money in it for them.  This was a great opportunity to make a step forward to removing cash and cheques, but if there is no margin for those involved, it really needs the Payments Council (or even govt) to pay for the advertising.  Perhaps the savings in printing cheques and bank notes would cover it eventually?

(My name's Will, by the way.  Just posting anonymously as views are my own).

A Finextra member
A Finextra member 12 February, 2016, 11:14Be the first to give this comment the thumbs up 0 likes

@Jeremy you make some very valid points.

As per my article I think it is too early to call Paym a failure, but the numbers published don't look good in terms of where the trend is going. E.g. the decrease in number of registered users is a cause for concern. I do think that the proposition and how it is executed needs to be revisited for paym to establish itself as a credible transaction method.

I fully agree that addressing databases such as Paym to route payment is critical. It relates to what identity can be used to pay someone.

Paym highlight how important execution is. We can't claim that paym remove friction when there is for instance massive friction when registering to it.

In regards to what will be the identities used to pay people, I would watch  how Facebook messenger, Whatsapp are going to support payments in a social environment. Will Facebook ID be the entry in the database or will that be phone number? Same for Apple imessage, I suspect their identifier will be the apple ID, rather than a phone number. Does faster payment make sense to them in view of Apple Pay?

and I didn't touch upon the level of protection for customers when using Paym.





A Finextra member
A Finextra member 12 February, 2016, 12:59Be the first to give this comment the thumbs up 0 likes

@Hakim, im my humble opinion I think your over analysing this. Some of the worst technologies get better adoption than PayM. If customers don;t know what it is and how good it can be and why they need it, why would we expect better adoption rates?

Banks should simply be making much more noise about PayM than they are...


Dean Wallace
Dean Wallace - ACI - Global 14 February, 2016, 19:28Be the first to give this comment the thumbs up 0 likes @Hakim, you have steered a great debate here. Jeremy's comparison to data trends was also quite refreshing at looking at past initiatives that were previously seen as failing. Time will tell with PayM - I would say the the schemes have been agressively pushing contactless for years now, and it's working out. I wonder if the same will be done for PayM...
Robin Setty
Robin Setty - ACI Worldwide (EMEA) Limited - Watford 15 February, 2016, 10:04Be the first to give this comment the thumbs up 0 likes

As the saying goes: it takes two to tango.  I'd love to use PayM more but not so many of my 'would be beneficiaries' are yet signed up to it.  Faster Payments has been a tremendous success and is now normal behaviour in the UK.  PayM simplifies FP further, by using the beneficiary's phone number, a piece of data which most payers would have, and provides the payer with certainty that their 'fat fingers' aren't going to lead to their money going missing.  What's not to like?  I really think the issue here is poor promotion and marketing by the banks themselves.  But having said that and as others have commented, it's still early days.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 15 February, 2016, 16:44Be the first to give this comment the thumbs up 0 likes

PayM seems to suffer from poor product design and / or poor messaging. In circa 1998, PayPal went viral by not requiring receiver to sign up for PayPal when a PayPal user wanted to send money. Logic being, it's much easier to make someone sign up by telling them they have money coming in and they need to sign up to receive it. 18 years later, PayM misses that opportunity - even today its website begins with receiver and says receiver must be signed up to PayM. What is the compelling reason for somebody to sign up to a payment method without visibility of money coming in?

A Finextra member
A Finextra member 15 February, 2016, 18:21Be the first to give this comment the thumbs up 0 likes

@Ketharaman, you're right of course, however fraudsters have now got a handle on that too. I've lost count of the many emails I receive purportedly from PayPal informing me that I have money in my account and asking me to 'click here' to receive it.  I never do of course, but many will (my wife for one) - even though she doesn't have a PayPal account!

Technology and functionality are great, but when consumers find it difficult to have confidence and trust in it, it will invariably wither on the vine. Fraudsters have a lot to answer for ....

Robin Setty
Robin Setty - ACI Worldwide (EMEA) Limited - Watford 16 February, 2016, 09:19Be the first to give this comment the thumbs up 0 likes

@Peter, and surely one of the major advantages that banks have versus challengers, through wrapping a feature up inside their (trusted) mobile banking app, is that it should give customers more confidence.  But because of their poor promotion of PayM, they're not taking advantage of their position here.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 16 February, 2016, 10:11Be the first to give this comment the thumbs up 0 likes


IMHO (1) Security is a hygeine factor; I don't know any product / service that became popular because people found it secure (2) Convenience is key to driving adoption (3) If there's a conflict between Security and Convenience, I'd prioritize Convenience in the product / service and handle fraud, if any, caused by relaxed security, outside the product via other means that I've highlighted in Mitigating Fraud Does Not Pay The Bills. But that's only me.

In a lighter vein, while the fraudsters are busy with PayPal, PayM might get away with a PayPal-like strategy now!