Alwynn, the operator of the UK’s National Lottery announced on January 16 the launch of a new digital payments solution that will see retail prizes paid directly into players’ bank accounts. The new system was launched in collaboration with Bottomline, a global leader in business payments headquartered in New Hampshire.
The National Lottery’s shift to digital payment processes has been a long time coming. Established in 1994, the state-franchised lottery has exclusively sent out winnings via check, which have long been widely excepted in the UK and provided a clear paper trail for transactions. However, legacy systems, such as check payments, have fallen out of favor in recent years due to their substantial administrative overhead and long transaction times.
In most countries, including the UK, the lottery and gambling industries are highly regulated, hence why the digital transformation of payments and transactions tends to take significantly longer than in other industries. After all, ensuring the security of financial transactions, while adhering with industry regulations, has long been a complicated endeavor, making it a major barrier to innovation.
Aligning with modern customer experience expectations
The National Lottery’s adoption of digital payments reflects a broader trend of traditional industries turning to modern fintech solutions. The benefits to customers are clear – after all, most people prefer digital payments because they’re faster and, usually, safer. Clearly, they’re also a natural match for existing online claims processing solutions, which the National Lottery has been using for years.
The demand for transactional security can’t be understated either, and the shift to digital payments marks a step up in that respect. Checks, by contrast, are notoriously prone to fraud, and they can go missing in the mail. For consumers, the fear of a £50,000 check getting lost in the mail is very real!
The administrative burden for organizations issuing checks are also significant, given the cumbersome manual workflows associated with them. Digital payments are largely automated, and they leave a full audit trail for security and compliance purposes.
New opportunities for payment and transactions fintechs
For Bottomline – itself a fintech company – the partnership should bring substantial growth, given that the National Lottery has over 10 million active players in the UK and has handed out over £90 billion in prizes since its founding.
Chances are, the initiative will encourage the creation of further partnerships between fintechs and traditional industries – not just in the payments and transactions space, but also in the delivery of personalized financial services. As consumer preference for digital transactions only continues to rise, there are fewer and fewer industries with largely untapped opportunities for fintechs. Soon, there will likely be almost none.