The Green Sheet Online Edition
October 12, 2026 • 26:10:01
A view from the UK: When public sector payments are about more than moving money
Public sector payments rarely attract much attention, yet almost £188 billion (approximately $249 billion) flows through the system every year—roughly the scale of the UK's welfare budget once benefits for pensioners, disabled people, housing support and working age welfare are added together (see tinyurl.com/5rv4tncb).
Despite that scale, public sector payments remain something of a blind spot in the wider payments conversation. Understandably, a lot of attention tends to be given to the hottest topics of the day whether that be AI or stablecoins, but public sector payments fundamentally serve a different purpose.
Unlike a card scheme or retail wallet, transactions aren't just being made faster or more convenient for the sake of it. Rather, the money has an outcome attached to it, like keeping a household warm, making sure a family can eat, or holding families together when circumstances have become suddenly difficult.
The difference between payments that facilitate a transaction and payments that exist to achieve a social outcome was a key theme throughout the Payments Innovation Forum's recent Innovation Day on public sector payments. Several points from that conversation suggest where the sector needs to go next. Vulnerability is now harder to define It's tempting to mentally box those that are impacted by financial vulnerability into a relatively small and identifiable group, but the reality is that the term is now much more fluid.
The Financial Conduct Authority's Financial Lives research has shown that around half of adults in the UK have at least one characteristic associated with vulnerability at any given time (see tinyurl.com/mr22x549). That could relate to poor health, a recent negative life event, low financial resilience or low capability.
A boiler breaking down, a job loss or a sudden diagnosis: any of these can tip a household from coping into crisis within days. How exposed this can leave people is significant with a quarter of Britons holding £200 ($265) or less in savings, according to recent consumer research drawing on FCA data on financial resilience (see tinyurl.com/42dpf5ze).
For these households, a mundane but unanticipated expense like a broken appliance can quickly create immediate urgency to look for support they never expected to have to find.
The convenience gap
There's a mismatch between the ease of everyday payments and the experience of those accessing public support. A consumer can open an app, choose a meal and have it delivered to their door with little to no effort. Meanwhile, someone applying for emergency assistance may face lengthy forms to complete, supporting documents to scan (if they have a scanner available in the first place) and a waiting time measured in weeks not minutes.
For someone already under pressure by the nature of their request, that gap in experience can become a barrier to accessing the support at all. Therein lies the uncomfortable paradox—technology exists to make moving money almost frictionless, but accessing it can be harder than it needs to be.
Some organizations are already working to tackle the problem, like Lightning Reach, which enables people to create a profile and check their circumstances against more than 2,500 grants, benefits and local schemes. Rather than expecting someone to know what support exists and then complete a separate application for every scheme, the platform brings those opportunities together (see tinyurl.com/5n6kx8va).
Cash first does not mean cash exclusive
There's undeniably a move towards digital payments in the UK, but that doesn't mean cash is redundant—LINK's most recent Cash Index found that 61 percent of people had used cash in the previous two weeks (see tinyurl.com/2f49vdy7). For many relying on public funds, cash can provide a sense of control and independence, but importantly it also is accessible regardless of whether they have a bank account or digital access.
There is a downside to address, however, and that is accountability. Once a payment has been made, there is little visibility on how that money has been used and whether it was used for its intended purpose. That can create a challenge, particularly for public bodies that face scrutiny over every penny spent.
There is a happy medium in the form of prepaid cards and virtual payment rails which can provide a compromise between the two challenges. The organization providing the funds retains a genuine audit trail, while the end user has flexibility and choice. These formats can also reach those who sit outside mainstream banking altogether.
The FCA's own data shows that around 900,000 UK adults remain unbanked, down from 1.3 million in 2017 but still a significant population that traditional bank transfers simply cannot serve (see tinyurl.com/byh92rpe
Connecting the infrastructure
While solutions are available to support, there isn't a single product that can solve the problem; it needs the ecosystem to work together cohesively. That ranges from signposts to help people identify the support they are entitled to, a procurement route for councils that has already done the security and financial due diligence, and a processing layer that can move the funds reliably.
The ecosystem shouldn't work in siloes either; rather than each council creating its own process, there should be a national framework to help this sector move faster. Not only would this create a reliable and predictable system for end users, but it would create efficiencies behind the scenes, too, reducing the administrative burden.
Systemic change
The goal of public sector payments should be to support people in moving toward greater and more sustainable financial stability. Therefore, there should be a greater understanding of how money distributed through digital payments moves through the local economy, and exploring how eligible citizens might be auto-enrolled into support they qualify for, within the consumer protection boundaries set by the FCA.
The challenges that are most visible in public sector payments are identification, trust and accessibility, but they're not exclusive to this sector. They are the same friction points that are limiting parts of the wider payments industry, too. There is a broader lesson available here, as solutions that are designed to work for people facing the greatest barriers often end up creating better experiences for everyone. 
Scott Dawson, head of sales and strategic partnerships at DECTA, is a highly motivated and results oriented individual with 20 years of experience within the payments industry. Previously, he served as commercial director at Neopay. He has also held fraud management positions at PSI Holdings and Neteller, before becoming senior fraud manager and then business development manager at ClickandBuy, which was acquired by Deutsche Telekom. DECTA provides end-to-end payment infrastructure, from acquiring to issuing and processing, but unlike other players in the crowded payments marketplace the company offers bespoke-as-standard solutions aimed at making payments accessible to everyone. Contact Scott via LinkedIn at www.linkedin.com/in/scott-dawson-uk/.
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