In today’s dynamic economy, agility is crucial. Businesses are navigating complex markets, managing multiple currencies and facing stringent regulatory requirements. Consequently, current payment systems are failing to keep pace with innovation – and this is where programmability comes in.
Programmable payments present a transformative opportunity for financial transactions – enabling automation, customisation and greater control beyond the traditional payment mechanisms we have today. While there have been attempts to define the term, they have often been in relation to programmable ledgers and programmable tokenised assets.
We’re proposing a new model where programmability is embedded at the account level, regardless of the type of funds, allowing for greater flexibility and enabling customers to select payment methods on a per-transaction basis, without being constrained by predefined functionality. Enabling programmability at the source of funds can remove fragmentation and offer a more versatile and powerful solution across diverse payment systems.
In this article, we’ll delve deeper into what we mean by programmable payments, the benefits it can unlock and what it means for businesses and consumers alike.
What are programmable payments?
In simple terms, programmable payments are automated payments that are triggered when certain conditions are met.
While many systems today offer a version of automated payments – like standing orders or direct debits, programmable payments go much further. They allow for greater customisation, like paying only when a service is delivered or when your account balance hits a certain level.
Unlike older models that build programmability into the underlying payment systems like Bacs Direct Debit or SEPA Direct Debit, or use blockchain-based tokens, this new approach focuses on building programmability directly into the user’s bank or digital account. This means the account itself becomes ‘smart,’ while still using traditional money. This approach simplifies the process for users and shifts the focus from programmable ledgers to a customer-centric perspective using existing forms of money.
What benefits does programmability offer?
As the world becomes more complex, the way we manage money needs to keep up. Embedding programmability at the account level provides a foundation for a more agile economic strategy, allowing institutions, consumers and businesses to instantly respond to competitive pressures and technological change.
- Increased control through automation
Automation brings benefits to consumers and businesses alike – streamlining routine payments, minimising manual effort, and offering better financial control. Individuals can set up automated rules to pay their electricity bill on payday or transfer funds to savings when they stay within their monthly budget. For businesses, this can be extended to pre-approved supplier payment rules, and intelligent liquidity optimisation strategies. - More safety, less fraud
Setting specific conditions for when payments should be made allows users to manage spending more precisely and avoid overpaying for services that don’t meet their expectations. Rather than sending funds upfront for a product or service, a rule can be set that releases payment only after confirmation of delivery, such as a shipping notification, signed receipt, or API trigger from a trusted courier or service provider. This “payment on delivery” feature can help protect against fraud, especially in online shopping or business contracts. - Dynamic financial control
Programmable payment systems allow for complex and dynamic limits on spending to be set. Instead of blocking a large purchase outright, programmable payments could warn you if a transaction would use up too much of your available cash. You could also delay payments to align with when you get paid, helping reduce financial stress during leaner months. - Smarter insights and budgeting
Programmability with insight into spending is a powerful tool for better budgeting. Analysing your spending habits can help to devise more accurate budgets. As everything is automated and transparent, you can easily see where your money is going and make better decisions over time. For those who use financial management tools, programmable payments can be integrated with these platforms to allow for forecasting into future spending, tracking irregular bills, and suggesting savings and cash flow strategies. - More convenience
Once you’ve set the rules, you don’t have to think about it again unless you want to make changes. This “set and forget” feature saves you time and energy and frees up time to focus on other priorities. The combination of flexibility, control and convenience makes programmable payments an attractive solution for consumers and businesses looking to navigate today’s rapidly evolving financial landscape.
How does it work?
In contrast to approaches that focus on ledger or application-based programmability, we refer to programmability within the context of a customer’s account – adding user defined customisable logic to control, enrich, automate and enhance payment flows in and out of the account.
By using a new domain-specific language ‘Payscript’ to apply a set of automated functions to the account, users can set up custom payment rules or ‘scripts’. The Payscript engine handles all the logic, connecting to your account within banking systems and to other services using APIs. From here, it then checks the conditions and makes the payment automatically when the time is right.
PayScript, our fully customisable, open standard language enables businesses to develop programmable workflows that improve the efficiency of payment processes by removing repetitive manual tasks.
Examples may include:
- “Pay the rent on the 1st of every month—unless it’s a weekend, then wait until Monday.”
- “Send £50 to my savings every Friday if my balance is over £500.”
- “Pay this invoice only if I’ve received a delivery confirmation email.”
The potential for widespread adoption
Widespread adoption of programmable payments is dependent upon striking the balance between automation benefits, security, ease of use and consumer trust. Key advantages including cost savings, financial automation and seamless banking integration can drive adoption, but challenges around security, compliance and industry education could create barriers.
To foster adoption, we must address concerns through enhanced usability, robust security mechanisms and regulatory alignment.
It’s clear that programmability has game-changing potential, enabling users to create their own payment rules, automate actions and create intelligent workflows. It’s time for businesses to innovate faster, minimise risk, and unlock new markets with programmable money.
Learn more about the capabilities of PayScript, a breakthrough in payment logic, and discover how programmability can redefine how money works for you here.
How Quant can help
Read more about our involvement in the UK’s RLN >
Discover how Quant Flow can help you realise the potential of programmability >
