The payments landscape continues to evolve and this blog shares some of the topics that caught my attention during the last month. If you think I’ve missed anything important, do please send an email to technical@treasurers.com.
From March 14 2022, Strong Customer Authentication will be fully implemented in the UK and come into force. This means that customers will need to confirm their identity when paying online to increase the security of transactions.
Regulatory announcements
- In the European Parliament MEPs agreed on draft rules on supervision, consumer protection and environmental sustainability of crypto-assets, including cryptocurrencies such as bitcoins
- The European Payments Council has launched an eight-week public consultation on the Standardisation of QR codes for mobile initiated (instant) credit transfers. The draft will aim to standardise a payee and a payer-presented QR-code for all types of payments: person-to-person, consumer-to-business, business-to-business (B2B) and business to consumer (B2C) while addressing both Instant Credit Transfer and payments.
Market news
In the UK, the limit for Faster Payments was raised to £1m. Actual processing limits remain set by banks.
- NatWest Bank became the first UK bank to successfully make a Variable Recurring Payment using a bank-owned Open Banking payments proposition. It will make it possible to replace current traditional payment methods such as Direct Debit and Card on File in the future by introducing a mechanism to authorise future payments within pre-agreed limits, allowing consumers to benefit from a new level of payment automation, while experiencing greater transparency and control over their finances.
- Fintech firm, Paga, announced that it has been selected as one of the payment service providers for Twitter's "Tips" feature in Nigeria. This will allow Nigerian creators to easily get paid via their Paga accounts.
Interesting reports
The US Federal Reserve Payments Study (FRPS) had a number of key findings including:
- while data from 2019 largely show a continuation of past payment trends, with card and ACH both gaining share at the expense of checks, payment behavior changed sharply in 2020 with the COVID-19 pandemic, with ACH gaining substantially as a share of noncash payments by both number and value
- the share estimates combined with other information imply that ACH was the only one of the three core payment systems to grow by number in 2020
- the total number of card payments declined in 2020, driven by a marked decline of in-person card payments. This is the first annual decline in the number of card payments recorded by the FRPS
- as in-person card payments dropped in spring of 2020, remote card payments took up much of the slack; later in the year, in-person card payments recovered
- First-time use of digital wallets was highest in the third quarter, when some restrictions on in-person shopping were lifted. When used with a mobile device, a digital wallet provides a low-touch option for in-person card payments
A new report from Accenture - Growing payments to new heights, looks at growth implications for friction-free value propositions. Its research found a wide range of approaches adopted by banks and a growing separation between leaders and laggards. One test that can be applied to your bank is shown in the figure below:
The report also includes a number of interesting case studies and innovations:
