global GDP is about $85trn so a $20trn revenue figure for the payments industry is implausible.
The $2.5trn from McKinsey also looks too high for revenue, although probably includes interest on funds.
Even so, whatever the true figure, it is big which is why payments attract so many new entrants and innovators from outside banking. However, it is also represents a friction which I would expect to reduce through competition and innovation - with continual change in the payments industry for years to come.
29 Sep 2022 21:41 Read comment
It was hardly a battle - Paym was implemented in different ways with different names by different banks, typically buried unexplained in a mobile bank app, never marketed properly with no industry strategy.
A single name and app, with a few tweaks such as auto-registration, with a proper go-to-market strategy, roadmap and marketing campaign would have done the trick - as it has with enormous success in Sweden (Swish), Norway (Vipps), Denmark (Mobile Pay), Poland (Blik), USA (Venmo), India (Paytm) to name a few. Unfortunately, the UK banks never showed an interest collectively or individually to make Paym a success despite the widespread evidence of mobile payment adoption elsewhere.
Today, UK consumers still need to know and key in/retain a contact's bank details in their mobile bank app to pay them (unless they use Paym of course) instead of simply tapping a phone contact, as has been doable in many other countries for years.
If Paym was offered as an open API, I am sure Fintechs and other innovators would transform its use - still time to do so?
29 Sep 2022 20:57 Read comment
This measure fails to get to the root of the problem which is banks struggling to detect the accounts fraudsters use to collect fraud and divert funds and then failing to block onward transmission of the funds. It's baffling why so little is said or done about this and whether some banks are worse than others at managing it (which fraud stats suggest is the case).
Reimbursement for victims is necessary and a good optic to show action is being taken but it will have no direct impact on fraudsters - it might even lead to APP reimbursement fraud.
29 Sep 2022 20:21 Read comment
A big dent could be made in APP fraud by requiring the beneficiary bank to check the beneficiary name on the incoming payment matches the name on the beneficiary account.
This check is missing in bank systems because historically Sort Code and bank number have been the identifier used since electronic payments started with BACS.
This check is a very simple one to make for banks, but presumably it remains unimplemented to avoid unmanageable numbers of rejected/suspended payments due to minor diferences in the sent name and correct name. However, if CoP is implemented by all banks for all types of accounts and without an option for the sender to override discrepancies flagged by CoP, then it would shut down a significant amount of APP fraud.
07 Sep 2022 10:19 Read comment
Faster Payments should have received major investment five years ago - far from hindsight, this was clearly obvious at the time with real-time payments in the ascendancy and the UK a world leader - and a plan to take FPS to the next level was in place.
Instead, the combining of FPS with BACS and C&CC into Pay.UK and the NPA programme have been a huge distraction. The NPA in its original form, trying to create an undeliverable and unnecessary one-size-fits-all infrastructure lumping in batch payments with real-time payments was a big mistake that could have been avoided if innovation was allowed to take its course - as this research implies, the opportunity cost to the UK economy has been huge. There is much work to be done to get UK payments back on track.
02 Sep 2022 21:45 Read comment
"fraud and increased competition justifies fee increases"
This summarises neatly why cards are problematic.
1. card networks are inherently prone to fraud, amplified by digital uses, requiring evermore sophisticated, complex and expensive anti-fraud measures
2. interchange fees incentivise banks and others to issue a network's cards - hence, the higher the interchange the more a network's cards are issued. A great business model for the networks but to the detriment of retailers and in the end to consumers. Card networks have massive network effects that will take years to unwind and replace with alternatives but in their current form they are ultimately unsustainable in a digital world.
However, it is best for market forces to cause a shift from cards rather than regulation such as capping fees. There is always the risk of unintended consequences with regulation, in this case the risk of reducing the imperative and urgency for retailers to innovate and adopt alternative payment methods better suited to the digital age.
25 Aug 2022 17:50 Read comment
I love this annual report from UK Finance summarising the UK payments market - full of useful and interesting facts and figures.
However, UK Finance should be bolder and more insightful with their forecasts. I agree with the comment that the forecast for FPS is too conservative. FPS volumes have been growing by around 20% or more for years and there are plenty of reasons to believe this will continue. Applying this growth to the 3.6bn FPS payments in 2021 gives 22bn payments in 2031 compared to the forecast 6bn payments in the report. This matters because it is indicative of how the banks and payment providers represented by UK Finance are consistently 'behind the curve' when it comes to planning, positioning and innovating leading to debacles such as the NPA and APP where the industry is all at sea. It has been clear for years that real-time payments are at the heart of the UK payments industry and the basis of innovation and this is where significant investment should have been made. Instead, the industry has made little progress with FPS much the same now as it was 10 years ago in terms of capability,squandering years of time scratching its head on how to deliver the NPA and what to do about APP fraud. Prior reports such as that for 2016 (https://www.ukfinance.org.uk/system/files/UK-Payment-Markets-Summary-2016.pdf) illustrate the scale of unanticipated change in the industry. In 2016 it forecast just 2.2bn FPS payments in 2025, a figure achieved already in 2020 and likely to be double that this year. It also forecast a decline in cash payments to 11bn in 2025, whereas they were already almost half that at 6bn last year. For what it is worth, my own forecast is that (non-card) digital wallet push payments will be the big story over the next 10 years. It will be interesting to see when they appear as a category on this report, my guess is 2026.
21 Aug 2022 11:19 Read comment
what do ACI mean by "digital wallet" - mobile banking account, Apple Pay wallet, PayPal wallet, virtual pre-paid card?
31 Jul 2022 13:59 Read comment
The principle of "polluter pays" should apply also to the banks who allow fraudsters to operate fraudulent bank accounts to collect the funds they scam.
I keep on repeating this and I am amazed at how little visible action is taken by the banks and the regulator to address this issue head on.
When fraud using bank transfers is committed the account the stolen funds are sent to is always known as are any accounts the funds are then forwarded to.
It is equivalent to always knowing the registration details of the getaway car in a robbery and all subsequent getaway cars the criminals use - but doing little with the information.
Innocent victims need to be reimbursed and the platforms that facilitate the scams have a duty to prevent them - but banks need to do more to prevent fraudulent account openings and account takeovers and do more to recognise and trace fraudulent payments flows into and out of their accounts.
It is also bizarre that confirmation-of-payee is used by (some) banks to alert payers if the beneficiary name they think they are paying is different to the account name, a red flag for potential APP fraud, but the receiving bank is under no obligation to do the same, very simple check for incoming payments, again a red flag that the account may be fraudulent if the names are different.
25 Jul 2022 22:59 Read comment
"a lawless and violent society", "annihilation" - this misinformation and misunderstanding of crypto assets are reaching absurd levels.
29 Apr 2022 08:06 Read comment
EBAday
Alexander Dunaevco-founder at ID Finance
Shahid MansuriCo-founder at Peerbits
Anders ÅkerlundCo-founder at Deedster
Alan SimaoCo-Founder at CCTech
Pierre RaymondCo-Founder at Global Equity Analytics & Research Services LLC
Welcome to Finextra. We use cookies to help us to deliver our services. You may change your preferences at our Cookie Centre.
Please read our Privacy Policy.