Great explanation of how Paym works. This is the only bit that’s slightly wrong. If you try to pay someone using Paym and they’re not registered, you simply cannot complete the payment. Paym tells you the number is not valid and there is no holding of funds whilst the recipient registers.
The intended recipient does get an unsolicited text from Paym telling them that someone has tried to pay them using their phone number, but as the vast majority of people don’t know what Paym is, the text looks just like a phishing fraud, which is not ideal. I think the sender should be prompted to suggest the recipient joins up to Paym instead, so the recommendation comes from a trusted contact.
Other than that I’m a big Paym proponent because it solves the issue with having to check and double check easily-mistyped account numbers and sort codes. We’re much more used to entering phone numbers, and most of the time they’re already verified because they’re already stored in our phone alongside a name. Plus the system presents the name of the account when sending a payment, something which doesn’t happen with account details. Any new contact number can be easily checked with a quick call or text.
I’m hoping Monzo auto-signs users up to Paym upon account opening, unless the number is already registered elsewhere, in which case they could suggest switching the registration.