CIF Commitments - Modulr (C) - £10m Award
Public Commitments Update - Q4 2023
Key Achievements to Date
- PISP payments have now reached 2.44m transactions initiated, a circa 450k increase since Q3 2023.
- 2.41m card transactions have been processed via physical cards, a circa 50k increase since Q3 2023.
- PaaS SME Reach for 2023 has been exceeded.
2 | Switching isn’t working for SMEs; we will create competition outside the existing banking system. Our digitally native Business Payment Account & Payment Services API is readily available via an online Developer Centre and Sandbox. This enables our direct business clients and partners to integrate payments into their products and business platforms quickly and easily. We aim to expand our existing successful product offering to allow our partners to provide additional capabilities. The CIF Grant will enable us to extend the functionality of this service to include SME specific needs such as physical card issuance and international payments, to support universal adoption by SMEs.
- The extension on Modulr’s capability allowing partners to meet all the payment needs of SMEs with our Business Payment Account & Payment Services API will begin in Q1 2020 and the final phase will complete in Q2 2023.
- Implementing these services with 12, 26, 41 and 48 partners by Q4 2021, 2022, 2023 and Q2 2024, who will ultimately be able to make them available to 860,000 SMEs.
Modulr is on track with this commitment. We have exceeded our PaaS SME reach target of 713,800 for 2023 with a reach of 767,568. In H124, we will continue our sales push within our SME channel and are confident in reaching our Q2 2024 target of 860,000.
With that said, given the breadth and depth of the reach Modulr has achieved via services we have delivered through our Payment Account and Payment Services API, we have met all other requirements of this Public Commitment, ultimately enabling our customers to embed payment services into their businesses quickly and easily.
3 | We will fight in the UK SMEs’ corner in making sure new, innovative payment methods solve SME pain points. SMEs have typically been last to access new industry wide payments initiatives and innovation. We will use the CIF Grant to make available the latest industry innovations to SMEs including:
- Fraud Prevention+ with our Confirmation of Payee Solution.
- Account Verification with Open Banking.
- Open Banking (Accountant Information & Payment Initiation Services) to deliver cash management and treasury management services.
- Modulr will continue to deliver proof of concept through to full product launch for the three key innovative payment services, starting in Q4 2019 and completing in Q4 2023, with continual delivery and enhancement of functionality through that period.
- Through our partners, Modulr will aim for our payment innovation services to be made available to at least 340,000 SMEs by Q2 2024.
Modulr is on track with this commitment and have met the required SME reach target for our Payment Innovation Services. Account Verification with Open Banking is the remaining functionality to be delivered by Q3 2024 for this commitment. Our volume of transactions through Payment Initiation Services (PIS), which went live in June 2020, continues to grow as reflected by our transaction initiations increasing to circa 2.4m. Work for our Account Verification Service has progressed with the continued development of AIS services.
4 | We will raise matched funds of £10m to supercharge our impact on competition. We commit to raising matched funds of £10m and deploy it to deliver on our commitments and expand the benefit of the CIF. These matched funds will be used to cover our scaling costs, marketing costs, external integrations and additional scheme access.
Further, we commit to allocate £500,000 to spend running at least 6 regional and digital payments education events per year for 5 years across Glasgow, Edinburgh, Bristol, London, Nottingham, Manchester, Cardiff & Belfast for SMEs on how to use new and innovative payment mechanisms, and to gain their direct feedback on how the new services should be developed.
Modulr has met part of this commitment having spent £500,000 on roadshow events across the UK market. As of the end of Q4 2023, co-investment spend stood at £9m and we will target deployment of remaining co-investment by Q4 2024 through finalising build for our Account Verification with Open Banking solution, and continued investment into Marketing and Sales activities to support the growth and development of the SME market.
We have high confidence that we will achieve this commitment in 2024.