How do we ensure that people and businesses can make the payments they need and want to in all circumstances?
by Flora Hamilton, Director, Financial Services, CBI & Member of the PSR Advisory Panel
When it comes to choice in payments, we can’t approach this topic without recognising the fundamental change in consumer behaviour towards digital payments – COVID-19 has accelerated this.
We have witnessed a huge decline in cash usage – brought about through increased demand for contactless card payments – both merchants and consumers were the driving forces behind this - and the increased use of e-commerce by consumers to make purchases right across the piste – from grocery, to restaurant deliveries, household, clothing, etc.
Clearly, we have witnessed the exercise of choice at play here by the consumers and their business providers and it happened very rapidly which meant that anticipated trends in payments moved in weeks rather than years.
It is now even more important not to adopt an easy majority viewpoint and let this seismic shift dominate our future payments landscape, we must ensure that the full range of payments choice is truly enshrined in our policy development. It is our societal duty – and this is the S of ESG within sustainable finance – that we do not leave those customers who didn’t make this digital move behind.
I also maintain that it is vital to not only keep our cash infrastructure in place, but we need to future proof it through new innovative solutions and make it fit-for-purpose so that its users remain fully included and enabled to participate in our economy.
But choice of payment method alone is not enough – we need to build trust and confidence in all our payments systems. Consumers need to know that they can access cash and then be able to use it and equally those users of digital solutions such as a digital wallet must have confidence that their money has the same level of protection as with a bank account. And very importantly users need to see and understand the value of that payment service – will it help me budget better, save more and reduce fraud and other risks.
When it comes to business, the SME user needs to have confidence that they can pay and collect funds with ease, speed and protection across their domestic and international supply chains. And it is even more important that they have the confidence to embrace new innovative solutions that our world-leading fintech sector is developing to help them in turn digitise their business operations for improved productivity.
We cannot talk about trust and confidence without acknowledging the challenge that fraud presents us with every nano-second of every day. The fraudsters are sadly also highly innovative and it is a constant cat-and-mouse game for the financial services providers, the regulators and government battling against them. Therefore it is vital that our government looks to bring in a national Digital ID programme which puts protection as its core objective. Consumers and businesses need to be confident to fully embrace the benefits of improved competition and innovation that the digitisation of our economy is offering them. Equally, there is little point in building a gigabit digital infrastructure across the UK if the protection architecture is not developed in tandem.
Competition and innovation are critical but without trust and confidence they are powerless to deliver change at scale. All users need to know that it is safe to experiment with new digital products and services to manage their finances.
Regardless of how we view this, it is clear that better outcomes for all customers have to the overarching driver for our regulatory framework.
It is so great that we are now in a period of real debate about the UK’s payments landscape and fintech strategy. As we leave the EU, we have this opportunity to ensure that our payments landscape is truly embracing innovation to ensure the best outcomes for all users – consumers, charities, SMEs and large organisations.