Why We Started Fire
By Colm Lyon
Originally published at www.realexpayments.com on May 29, 2014.
Last week we announced the launch of our new Pay with Fire Personal Account. We thought it might be useful to give more background to the product, the business and our plans.
It was back in 2009, sitting in an Indian restaurant in London that I first read the Payment Services Directive and realised that it would open the door for non-banks to enter the more traditional payment markets. And so we created a subsidiary business, Realex Financial Services Limited (initially called Carapay, and since renamed to Fire Financial Services Ltd) and applied for a licence to provide regulated services in addition to the core business of Realex Payments.
We applied to the Central Bank of Ireland for authorisation to operate as a Payments Institution under the then new European Communities (Payment Services) Regulation 2009. We were one of the first Payment Institutions to be authorised in Ireland.
The idea behind the Regulations was to provide the legal foundation for the creation of an EU-wide single market for payments. It also seeks to improve competition by opening up payment markets to new entrants outside the traditional credit institutions or banks, as they are more widely known.
Despite the failure of banks and regulation in the past, we believe that the payments legislation under which we are authorised is more robust, more transparent and provides better protection for customers. It is a major step towards creating competition for the provision of banking style payment products.
All customer balances in Fire Personal Accounts are 100% held in segregated client bank accounts at regulated financial institutions (which we selected via a tender process) in accordance with the Central Bank’ “Prudential requirements for payment institutions” and are never used for any operational purpose.
We are not a credit institution; we do not hold deposits and the Eligible Liabilities Guarantee Scheme does not apply to us. In any case it ended for all new liabilities placed after midnight 27 March 2013.
As a regulated financial institution, we are obliged to comply with number of different Acts and Statutory Instruments including those relating to Anti-Money Laundering, Consumer Protection, Enforcement, Fitness and Probity, Industry Funding Levy to name a few.
We took all this on board and had legal, compliance, and operations staff along with processes and procedures in place, before we had our first client. Our back end systems are hosted with our parent company, “Realex Payments”, who process in excess of €20 billion per annum for 12,000 online retailers.
With our authorisation in hand, we progressed and joined the Irish clearing system (bank payment network) and the EURO or SEPA clearing. This allows us to create accounts for customers that would fully interoperate with the banking or clearing systems — in other words all Fire Personal Accounts have a Sort Code, Account Number, BIC and IBAN — just like regular bank accounts. This process took around two years to complete.
These achievements provide us with the scope to provide all the features of a current account. That was a critical element of the core business. The Fire Personal Account available today does not replace current accounts. It is a “payment account”, an account that you open for the purposes of making payments.
We were keen to get a service live and had several hundred customers help us during the beta phase — for which we are really thankful. Thus far, the feedback for the services that are currently available has been very positive.
Our next step is to release the personal mobile apps and these are only weeks away. We are also connecting to the UK banking network and what we regard as a real disruptor — our business account — follows after that. We have a number of businesses already working with us on the beta programme. Should you wish to talk to us about our future business services, let us know.
We fundamentally believe that payments need to be redesigned and our ambition is to make payments more connected, mobile, accessible, safer and less expensive. It’s a big ambition, supported by an experienced and highly competent team.
We believe we have taken the first one or two steps along the way to achieving our goals. To truly disrupt takes time, money, patience and carefully managed risk.
We want to thank everyone who has helped along this journey, thus far.
Colm Lyon CEO & Founder.
