With contactless and mobile banking, payments are so quick you’ll forget you spent money at all –until you’re inevitably notified by an app. There’s even talk of solutions to pay with just a fingerprint. The result? Fewer and fewer people now carry cash.
A positive step for most consumers and businesses which increases convenience and encourages spending, this has thrown up some challenges, particularly in the charity sector. Less cash in people’s pockets means fewer coins dropped in buckets, and a consumer used to paying in milliseconds is even less likely to sit down and fill in a form in a busy shopping centre.
While many charities are beginning to implement contactless payments, the sector isn’t the fastest mover when it comes to integrating tech due to cost and other barriers. “There’s around £3-4bn in cash donations every year,” says David Michael, CEO and Co-Founder of Streeva. “If you look at retail, 50% of spend is via contactless, so this could potentially equate to £1.8bn in charitable donations – but at the moment it’s a small fraction of that,” he adds.
Another problem this throws up is Gift Aid – a tax benefit that can be added onto a charitable donation. “Missed Gift Aid alone costs charities a billion a year,” says Michael. “From HMRC, it’s mainly down to opportunity and education. Of around 200,000 charities in the UK, only 76,000 claim Gift Aid,” he adds. This was the specific problem Michael set out to solve – if there was a tech solution that could add on Gift Aid with the tap of a card, then charities would benefit hugely.
Streeva was founded with the aim to make payments work better for everyone by linking data. Its first product, Swiftaid, aims to solve the Gift Aid dilemma. The origin story will be familiar to many FinTech founders. “This all started with being frustrated with the process,” says Michael, a founder who had no FinTech background but, through running a small business, had experienced an imperfect payments system himself.
The first step was to engage the industry, and of course HMRC. “They have a different language,” Michael comments. “Watching Yes, Minister helped me to understand their terminology.” Despite being divided by a common language, gaining HMRC approval was a proud moment for the team and the process was beneficial. “It’s good to have to do something correctly and really think it through – that’s what you need in FinTech, that rigour to make sure it is done properly.”
HMRC sign-off came following a pilot with Visa for the Natural History Museum, and Streeva also gained a grant from Innovate UK. Working with organisations at every step of the way has been key to Streeva’s success thus far.
“The biggest thing is understanding what you can do, and therefore what challenge you can address,” says Michael. “The only way to do that is by talking to people. If you just design your ideal solution without really knowing what the problem is, it’s much harder to sell than if you work really collaboratively with a number of potential customers to create the perfect solution.”
Where the charity, regulatory and FinTech worlds collide, Streeva is working hard to build an ecosystem. Much of the company’s progress has been down to the UK’s supportive finance landscape. The Innovate UK grant is an example of several available to FinTechs, with an increasing number focusing on solving specific problems rather than enabling technologies. “I know HMRC is trying to do more too,” says Michael. “They have an action point to try and do 33% of their procurement through SMEs.
“There are goals in the industry to help FinTechs and other small businesses, but I don’t think there’s much of a structure around it yet,” he adds. “Businesses need to be able to approach HMRC and provide things to a point HMRC would be happy to procure from them – that’s a key challenge at the moment.”
Michael and the team at Streeva are working closely with HMRC to bring the charity industry together to solve the problems surrounding the valuable tax benefit. Streeva is leading technically and architecting the Future of Gift Aid, working with Charity Tax Group and many other leaders in the industry on a shared mission to get more crucial funding to those who need it most. The FinTech combines new technologies with legislation to simplify the entire process without the need to alter policy – making Gift Aid easier for everyone.