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
Well, the Wild West resulted in..... California, Silicon Valley, vast areas of food production, some of the highest GDP per capita in the world for more than a century.
It was a major opportunity in the late 1800s for those prepared to brave it to access land with the promise of prosperity and independence and it paid off for them massively. A huge success story.
Just saying....
25 Apr 2022 20:53 Read comment
This is a good start, but the whole governance of Pay.UK, starting with the board needs a good overhaul to strengthen the organisation and improve its effectiveness.
It is 5+ years since FPS initiated project Devon to replace its infrastructure which is still in place with no replacement in sight. The NPA has proved to be a massive blocker to the modernisation of UK payments.
With a CTO to drive, hopefully we will see some progress, but stronger governance is needed in both Pay.UK and its regulators for the UK to re-establish its lead in payments.
21 Apr 2022 14:41 Read comment
let's hope the ECB takes a holistic approach and includes stress tests of the risk to the banking sector and wider economy of the unintended consequences of climate policies - for example, the misallocation of capital over the past decades to green energy infrastructure which has led to the current energy crisis in Europe with its repurcussions for inflation, economic growth, security, poverty and energy dependent production such as food
27 Jan 2022 15:10 Read comment
Banks are fined but no-one ever seems to go jail - could this be because regulators will never get the same revenues from fines by going after individuals as they do with banks?
It sometimes looks like banks are making risk-based decisions on AML fines v profits, it sounds ridiculous, but could it possibly be happening?
Then there is The United Nations Office on Drugs and Crime (UNODC) estimate that 2% - 5% of global GDP is laundered each year, that is over $2trn or more, and only a tiny fraction is caught by bank AML procedures. $2trn is a huge sum of money - where does it all go? It must be hiding in plain sight in society. But how can this be given AML controls operate by assuming counterparties are guilty until they prove their innocence?
There is something very, very wrong with the global approach to financial crime - it is almost like a racket in itself.
13 Jan 2022 23:17 Read comment
EBAday
Eugene DanilkisCo-Founder at Mambu
Tatiana RozoumCo-founder at Fintecture
Kerry LeechCo-founder at Roo & Eve
Dmitry PanovCo-founder at Whillet - BaaS for embedded finance
Dmitri GmyzaCo-Founder at Ultra Stellar
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.