The UK tax authority has handed a £3 million Open Banking contract to fintech startup Ecospend, with the aim of making it easy for taxpayers to submit payments direct from their bank accounts, rather than through debit or credit card.
Viewed as a significant boost to the uptake of Open Banking services in the UK, Her majesty's Revenue and Customs (HMRC) worked with the Open Banking Implementation Entity (OBIE) on the procurement exercise, which went out to tender last year.
Currently, taxpayers must open their own banking software and manually set up a bank transfer payment, opening the possibility that an incorrect reference is used for payment.
Under the new systems, payments will be sent directly from a payer’s bank account, using validated HMRC details to address the problems with fat finger errors. The system also has the potential to reduce fraud, as money is transferred without the need to share card or bank details.
HMRC expects that Account Information Services will enable it to access customers' transactional data to deliver "enhanced and tailored financial services".
Simon Lyons, head of ecosystem engagement at the OBIE says: “Today marks a big step forward for adoption as it will help bring the benefits of open banking to the entire UK population. In this instance, the use of open banking technology will revolutionise the often time-consuming manual process of filling in tax returns and will dramatically streamline the processes through automation.”
Founded in late-2017, Ecospend has been operating in stealth mode until late last year when it pitched for the HMRC tender.
Metin Erkman, founder and CEO of Ecospend says: “Since founding Ecospend, we have spent the last three-years focused on building our underlying technology and API in-house. Because of this, we’re now able to provide the best solutions, such as our account-to-account payment system for HMRC. But, this is just the first step, we understand if we’re really looking to deliver on the promise of open banking, innovation needs to happen at an ecosystem level and that’s what we’re here to do.”
The self-financed business employs a team of 50, is headquartered in London and will open an EU office in H1.