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In the context of consumer protection, an objective at the heart of financial regulation, this increase in the contactless limit to £100 makes no sense and is nothing to celebrate.

The average contactless card payment is about £12 and that on a mobile (Samsung Pay etc) is a few pounds higher, so the previous £45 limit was more than sufficient.

Instead, now it is open season for fraudsters with stolen cards to use them to steal up to £300 in three £100 tranches,instead of seven £45 ones, before a card is checked requiring a PIN.

The liability for contactless fraud can be unclear and the banks' instinct is to withold settlement of fraudulent payments from retailers who have made the sale in good faith. Luckily, in most cases they can set their own contactless limit below the maximum and I expect many will, especially small businesses and petrol retailers (which are highly susceptible to card fraud) - few can afford to take multiple hits of £300 losses.

So consumer protection is compromised, the consumer experience becomes unpredictable and small business exposure to fraud has increased significantly. With APP fraud rising rapidly, risking increased card fraud in addition is inexcusable.   

a digital pound will be launched in the UK next year through the pingNpay payment network for small value payments (<£20) using e-money tokens (aka stablecoin) on a blockchain ecosystem 100% backed by commercial bank deposits, evidenced through a proof-of-reserve mechanism

McKinsey highlights, perhaps unwittingly, one of the biggest issues in payments today - huge, unecessary costs and rent seeking business models. Global payments industry revenue of $1.9trn borders on the absurd, representing 2.2% of global GDP simply to shift accounting entries between ledgers. Banks and payment processors will do their utmost to preserve these revenues, with or without CBDCs. A growth trajectory of 6% - 7% is unsustainable and will simply accelerate the innovation coming to payments with digital assets - at a fraction of the cost, with superior resilience, security, consumer protection and customer experience.

“If you talk to the blockchain people, they think CBDCs will be running on blockchains. If you talk to central banks, it couldn’t be any further away from that.”

This begs the question - if central banks have no intention to run CBDCs on blockchains, why are CBDCs a hot topic now with central banks? Central banks have had the (non-blockchain) technology to launch CBDCs for decades (for example, relational databases + internet applications).

If CBDCs are to be credible central banks need to answer this question convincingly, and credibly.

The good news is that the Faster Payments system continues to go from strength to strength, in particular the real-time SIPs (single immediate payments) - up from 731m txns in 2015, the year the ill-fated Payment Strategy Forum started, to 2.3 bn SIPs txns in 2020. SIPs txns are up 27% already in the first six months of 2021 over the same period last year.

However, the biggest detriment to the UK is the lack of innovation that the PSR has as an objective. There has been virtually none since 2015, except for open APIs, although volumes are still very low.

As an indication of how UK payments is suffering, in India UPI was launched in 2016 opening up the real-time payments switch (similar to the one powering UK Faster Payments) with open payment initiation API access to third party apps. UPI has been a huge and rapid success, crossing one billion monthly transactions in October 2019 and three billion in July 2021.

The UK payments industry urgently needs to focus on unleashing innovation like this instead of spinning wheels endlessly on procurement and process.

This is reinforces the case that a CBDC needs to remain behind the scenes to avoid confusing the public and expecting them to differentiate between bank deposits and CBDC.

The only difference visible to the public should be new innovations in paying, replacing entrenched methods such as cards with, for example e-money wallets funded (and defunded) from bank accounts and from other e-money wallets.

Good to see the FCA taking action here.

Weaknesses in due diligence, transaction monitoring, and suspicious activity reporting make it easier for fraudsters to open bank accounts.

A consequence is authorised push payments fraud which is devastating for victims and is fast becoming the biggest risk to innovation in UK payments. It is unsurprising that APP fraud is on the rise if banks have weaknesses in their controls, and it is scandalous that these weaknesses persist.

The FCA's concerns on governance and oversight is particularly enlightening as it explains the perception that as a whole the UK banks are failing to take APP fraud seriously. That has to change.

The headline is very believable - examples today include Alipay 870m mobile users, Wechat 800m, Paytm 450m, Apple Pay 383m, plus many other wallets with wide local adoption such as Bkash in Bangladesh in addition to those mentioned above.

There are many different types of mobile wallet ranging from dematerialised card containers such as Apple Pay to stored e-money accounts such as PayPal mobile, to telco wallets to crypto wallets.

Although mobile wallets are less obvious in Europe it is easy to see how Google Pay, Apple Pay etc will supersede plastic for card transactions; but look to Asia and Latin America for how the future will look with mass adoption of mobile payments.

The debate needs to be clear on the "we".

"Do we, the public needs CBDCs?" is a very different question to "Do we, the financial services sector, need CBDCs?".

The biggest challenge for CBDCs is consumer adoption. The rise in cash issuance and decline in cash usage shows the public have an appetite for central bank money as a store of value but have less need for it in everyday payments. Migrating to central bank money with strings attached - a CBDC with rules, from central bank money with no strings - cash, will require policies and a design that make CBDC compelling. With innovations gathering pace in both commercial payments and crypto, CBDCs best chance of success is to support and ride those innovations rather than be developed in isolation to them or ignoring them. Use case choices go only so far in gaining momentum in adoption, but ultimately CBDCs need to be useable ubiquitously.