Getting on surprisingly well without (often) visiting your bank

Issue 103 | 8 March 2021

Welcome to issue 103 of Payments:Unpacked, get to grips with the UK’s retail payments landscape with Mike Chambers - exclusive payment insights, hot topic briefings and fundamentals unpacked.

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Contactless payment limited to rise

With contactless payments accounting for 37 per cent of all credit card and 59 per cent of all debit card transactions it is perhaps, no wonder, that the Chancellor has announced an increase in the UK’s contactless payments limit.

In his speech last week the Chancellor announced that the single contactless transaction payment threshold limit will rise to £100:

Following the budget speech the FCA said:

The Financial Conduct Authority (FCA) has confirmed changes to its rules to allow for an increase in the single transaction contactless payment threshold from £45 to £100. The contactless threshold for multiple transactions will also increase from £130 to £300.

The Financial Conduct Authority

This announcement is the fifth limit increase since contactless payments to the value of £10 were introduced in 2007:

More: Contactless payment limit to rise.

Payments Tracker

In Northey Point’s latest round up of retail payments, we see the impact of Lockdown 3.0 on the volume and value of payments processed in the UK.

The Faster Payments extract reads:

In the 12 months to the end of January 2021 we see that:

  • Single Immediate Payment volumes have increased by 22% (12 months to December 24%)

  • Total Faster Payment volumes have increased by 15% (12 months to December 17%)

  • Single Immediate Payment values have increased by 12% (12 months to December 13%)

  • Total Faster Payment values have increased by 7% (12 months to December 8%)

Although the trend continues such that monthly volumes remain above pre-Covid levels, the trajectory does now appear to be slowing down in Lockdown 3.0; the total number of Faster Payments processed in December 2020 was 269,379,000 compared to 226,705,000 in December 2019; however January comparisons are 233,196,000 for 2021 and 223,358,000 in January 2020.

More: Payments tracker.

Banking 1980’s style

When studying for my Chartered Institute of Banking exams as a Grade 1 Bank Clerk in the late 1980’s little did I know where my banking career would take me.

My roles in product management, as the CEO of systemically important payment systems, my responsibility for the live launch of the Current Account Switching Service and being chairman of the first accredited Request to Pay company have all benefitted from my day release studies at the Chelmsford College of Further Education.

As a product of my studies, I give you ‘An introduction to deposits and savings‘ at the South East Bank PLC – copyright 1986.

Both banking and payments have come a long way since the late 1980’s and I am not sure that the offering from the South East Bank would fare well against a modern day bank account. 

That said, my tutor thought that the marketing brochure was ‘well illustrated’ (thanks Elaine) and was comprehensive and readable – grading the piece of work as an ‘A’.

That said, I didn’t manage to complete the course so could never proudly display the letters ACIB after my name on my business card or CV.

Read: South East Bank - An introduction to deposits and savings.

Getting on surprisingly well without (often) visiting your bank

“Customers, helped by external cash dispensers and by credit cards can get along surprising well without often visiting their bank.” 

D. Vander Weyer, Barclays, 1970.

Thanks to innovations like the credit card, after 50 years we have an increasingly ‘cashless’ and an almost ‘chequeless’ society.

Also, how often do we visit our bank branch? (If our bank actually has any physical branches).

Ever wondered what led to the foundation of the Bank of England in 1694?

Alice Beagley, the Bank’s Museum Officer has written about why the Bank of England was founded - Alice starts with a quick explanation:

The Bank was founded because Charles II didn’t repay the debts he owed to goldsmiths.

“Hang on a minute,” I hear you say.

“Charles II wasn’t even on the throne in 1694… what on earth has he got to do with any of it? And goldsmiths?

Aren’t they a chain of high street jewellers.

Read: Why was the Bank of England founded?

PAY360: An invitation

As one of the Emerging Payments Association’s Ambassadors, I would like to invite you to join me as my guest at their flagship conference PAY360, taking place virtually next week, from the 16th to 19th March.

The invite is completely complimentary.  All you need to do is register here:

Over 1500 people have already confirmed their places and are starting to set up their meetings for the week.  You can see which companies are sending representatives here:

Highlights of the event include:

16 hours of dynamic content spread across 4 days with keynotes from NatWest, Mastercard, Barclays, Citi, the FCA, and British Retail Consortium. 

Speakers include:

  • Kelly Devine, President, UK & Ireland, Mastercard

  • Victoria Cleland, Executive Director for Banking, Payments and Innovation, Bank of England

  • Marion King, Director of Payments, NatWest

Register your place:

Strategic trends: Retail payments in a future world

Pay.UK have today (8 March 2021) published a report exploring the key trends that are shaping the future of retail payments.

The report, “Strategic trends: Retail payments in a future world” explores the way our homes, work and play are being changed by evolving technologies, smarter AI and changing consumer behaviours.

Alongside the report, Pay.Uk are launching a Knowledge Hub, designed to encourage the industry to collaborate and innovate around challenges and topics to shape a shared vision for the future of UK payments.

You can access the Knowledge Hub by registering for the Pay.UK Portal.

The first of a number of planned collaborative projects through the Knowledge Hub is to ask the payments community to consider how the Covid-19 pandemic has changed the trajectory of the industry.

Part of our purpose is to facilitate innovation in the payments industry. Today’s report, and the launch of our industry challenge, are both aimed at starting a conversation and stretching our thinking about how our society is changing and what this means for the future of payments in the UK.

Kate Frankish, Director of Strategy at Pay.UK

More: Strategic trends: Retail payments in a future world.

Future governance of Open Banking

The Competition and Markets Authority (CMA) have published a consultation paper on the future governance of Open Banking. 

As the implementation phase of the OBIE’s work concludes, it is important to consider how open banking forward in the UK can be driven forward and help customers take more control of their finances. 

Your submissions to this consultation process will be important input for the decision-makers in the CMA, alongside artefacts including the OBIE’s recently-published Annual Report, as they work out how momentum in maintained and ensure the UK remains a world leader in open banking and financial innovation.

More: Future governance of Open Banking.

ISO 20022: Are you ready?

More and more information seems to come out from the regulators, timelines are confusing and seem to keep changing.

Org’s ISO 20022 webinar on 18 March plans to shed some light on the details. Register today and join us to hear from our payments experts Nancy McCaw, Tony Wilson, Anne Pieckielon, David Core and Rob Lanham. 

Webinar: ISO20022: Are you ready?

M&S Bank to close all current accounts and instore branches

The banking offshoot of UK retailer Marks & Spencer is to close all of its current accounts and shut its 29 instore branches to focus instead on reward-based credit cards and digital payment services.

Launched in 2012, M&S Bank operates as a joint venture arrangement between HSBC and Marks & Spencer. It currently claims some three million customers.

The move away from the traditional banking market has been brought about the shifting consumer landscape and the digital progression in banking brought into sharp relief by the Covid pandemic.

The retailer says it will pull up the shutters on its bank branches in July and stop serviving current accounts in August.

As we adapt to meet the changing needs of our customers, and we deliver some new - more digitally-focused products and services - it does regrettably mean we will move away from branch-based servicing and the 29-in-store bank branches and associated current account will close this summer. We’re now firmly focused on supporting both our customers and colleagues through this change, and the delivery of our transformation plans, which will create new and rewarding payment solutions for M&S shoppers, both in-store and online.

Paul Spencer, CEO, M&S Bank

More: M&S Bank to close all current accounts and instore branches.

In brief

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The Payments:Unpacked newsletter from Mike Chambers at Northey Point explores a wide range of the UK’s payment news including: Open Banking, Request to Pay, Direct Debit, Confirmation of Payee, Bacs, CHAPS, Faster Payments, LINK, cash, cards, cheques and Central Bank Digital Currencies (CBDCs) and unpacks the eco-system that supports the operation of these systemically important payment systems.

The newsletter is an independent and informed insight into the UK’s payments landscape – exclusive payment insights, hot topic briefings and fundamentals unpacked.

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