The Proclaimers walked five hundred miles - how far would you walk (to an ATM)?
Issue 150 | 27 July 2021
Pockets of vulnerability remain but most UK consumers have reasonable access to cash
Research commissioned by the Financial Conduct Authority and the UK's Payment Systems Regulator finds that most people have reasonable access to cash through a combination of bank, building society, or Post Office branches and ATMs.
The FCA and PSR estimate that 95.4% of the UK population are within 2km of a free cash access point and 99.7% are within 5 km.
The withdrawal of bank branches and free-to-use ATMs on Britain's high streets alongside a mass-market switch to contactless payments has raised concerns that vulnerable consumers who rely on cash are being left behind.
Consumer research conducted by the regulatory bodies finds that there remains a broad spectrum of consumers - typically on low incomes or in ill-health - who contine to rely on easy to access cash.
Around 5 million adults say they still rely on cash, and we know that where access is removed, it can affect the most vulnerable in society. This is why we have intervened in the past to provide banks with guidance on what to consider when closing branches.
Sheldon Mills, executive director, consumers and competition at the FCA
However, Hargeaves Lansdown responded by stating:
The pandemic has accelerated the ever-decreasing circle of bank branch closures, but the FCA has concluded that this isn’t causing widespread cash deserts, where people have to travel for hours to get their hands on their money. Unfortunately, it’s using a pretty generous definition of what makes cash accessible.
Even with this generous definition, there some major gaps, including rural areas, where only around three quarters of people are this close to their cash.
However, given that the 5 million adults who rely on cash include the most vulnerable groups, you have to ask whether 2km really is a reasonable distance to expect them to travel. Could anyone with mobility issues cover a 4km round trip each time they need money - especially if they don’t have transport? When the distance is narrowed down to 1km, the numbers look far less promising, with only around half of people in rural areas this near to their money.
Sarah Coles, personal finance analyst, Hargreaves Lansdown
The FCA and the PSR will continue to work with Government to prepare for legislation, and with industry and other stakeholders on cash access issues. The FCA intends to update on the next steps on its work in Q4 this year.
Global CBDC Tracker
The Atlantic Council’s GeoEconomics Centre have launched a state-of-the-art Central Bank Digital Currency (CBDC) Tracker, offering a global look at the adoption of digital currency.
The original version of the tracker (launched in April 2020) has been used by the Federal Reserve and the Bank of International Settlements across the world to help understand the decisions countries are making in this rapidly advancing space.
The new interactive database released features 81 countries, more than double the number of countries the GeoEconomics Center identified as being active in CBDC development in 2020.
China has been charging ahead in its development of its own digital currency. As of June 2021, the People’s Bank of China (PBOC) announced that nearly 21 million personal and 3.51 million corporate digital yuan wallets had been opened. Aiming for broad circulation in 2022, the PBOC and the Hong Kong Monetary Authority last week announced plans to test the digital yuan with foreign visitors ahead of the 2022 Beijing Winter Olympics.
In the United States, the Federal Reserve remains sluggish in its progress. Of the four largest central banks in the world (the Federal Reserve, the European Central Bank, the Bank of Japan, and the Bank of England), the Federal Reserve is the only one to not commit to a digital currency test project.
Other key findings show that as of July 1, five countries have fully launched CBDCs, with the Bahamas being the first nation to reach wide distribution.
Of the remaining 76 countries, 33 are in research, 15 in development, and 14 in pilot stage, including major economies like Sweden and South Korea.
Before Covid, central bank digital currencies were largely a theoretical exercise. But with the need to distribute unprecedented monetary and fiscal stimulus around the world, combined with the rise of cryptocurrencies, central banks have quickly realized they cannot let the evolution of money pass them by.
Josh Lipsky, Director of the GeoEconomics Center and former Senior Advisor at the IMF
‘Why do men and women view switching bank account differently?’
Jo-Anne Ainsley from Pay.UK has been exploring gender attitudes to banking and financial services.
Jo’s latest thought piece stemmed from Current Account Switching Service research which found that of those who’ve never used the Current Account Switch Service before, men are 50% more likely to be aware the service exists vs women (30% vs 20% of total respondents). Men are also more likely to view switching overall positively when compared to women.
Lloyds and Mastercard aim to take A2A payments mainstream
Lloyds Commercial Banking is rolling out a new payment service which enables consumers to make payments on an organisation’s website directly from their bank account, without having to enter any payment details.
The new service, dubbed PayFrom Bank, combines Mastercard’s Payment Gateway capabilities and its Open Banking Connect platform to deliver a merchant A2A payment page that covers around 95% of UK bank accounts with Open Banking APIs.
Initial interest in PayFrom Bank is coming from charities for online donations and wallet funding use cases such as investment accounts. United Response, a charity that provides support to people with learning difficulties, autism, and mental health needs, is the first merchant to go live with the proposition.
Our Open Banking Merchant Payment Solution offers merchants and consumers an alternative to card based payments and even greater choice over how they checkout. Merchants can now provide their customers with a wider range of payment methods without needing to store payer account details. It also removes friction for consumers as all payer details are automatically populated, meaning there’s no risk of entering the wrong account details
Kelly Devine, divisional president of Mastercard UK and Ireland
Each month premium newsletter subscribers receive an update tracking the volumes and values of the UK’s payment schemes - here’s a snapshot of the latest Faster Payments update:
In the 12 months to the end of June 2021 we see that:
Single Immediate Payment volumes have increased by 26% (12 months to May 27%)
Total Faster Payment volumes have increased by 21% (12 months to May also 21%)
Single Immediate Payment values have increased by 24% (12 months to May 22%)
Total Faster Payment values have increased by 20% (12 months to May 20%)
The trend has continued in June with both volumes and values significantly ahead of 2020 levels – although the volume percentage increase has fallen by one percentage point; June 2021 saw an increase of 28% in the volume of Single Immediate Payments processed in the month compared to 2020 and 41% in the value of Single Immediate Payments. The increased use of faster payments seems to be a digital payment habit that will be here to stay, reinforced throughout each lockdown over the last 12 months and continuing as restrictions ease.
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7 things we can learn from Starling’s 2021 Annual Report
Altfi have been looking into Starling’s 2021 annual report and have highlighted seven things we can uncover from the report:
Hiring is heating up
Lending revenue is booming, Marketplace revenue is... not
Starling is (still!) working on ‘Murmur Financial Services’, aka Irish expansion
Banking-as-a-Service isn’t big business anymore
A BCR bank balance update
Starling’s embedded future?
Anne’s shareholding (and possibly salary)
Mastercard simplifies card payments for crypto firms
Mastercard is using the USDC stablecoin to make it easier for people to spend their cryptocurrency with its cards.
Today, when people spend cryptocurrency such as Bitcoin, Bitcoin Cash, Ether, or Litecoin, it must enter and settle on Mastercard’s network as traditional fiat currency - something that has proved a major operational barrier for crypto providers.
In February, Mastercard said it was preparing to solve this problem by enabling stablecoins directly on its network, acting as a bridge to simplify the process.
Mastercard have revealed that it is working on a pilot with Circle, the principal USDC operator, as well as Evolve Bank & Trust and Paxos Trust, to enable banks and crypto companies to offer a card option to people wanting to spend their digital assets anywhere Mastercard is accepted.
Card Industry Professionals: Synchronised lending helps merchants fund improvements and keep the cash flowing…
Access PaySuite: Download - Big Change: What does the post-pandemic payments landscape look like?
Answer Pay: Request to Pay’s Grand Tour.
Bitcoin And Border Crossing, Fintech And Foreign Exchange
This week’s longer read is from Dave Birch and starts:
Remittance costs impact the poorest people. The blockchain won’t help. What will?
In the year 1540, Sir Thomas Gresham (who later became Queen Elizabeth I’s banker and is in many ways the father of the modern City of London) set out in true fintech pioneer style to evade capital controls and smuggle the equivalent of some $40 million in today’s money from Antwerp to Calais on behalf of King Henry VIII. Nowadays he would have used bitcoins and run them through a few mixers, but due to the technological limitations of Tudor money transfer, he was forced to sneak out of the Low Countries with 25 bags of gold and silver coins.
(You would think that absolutely everyone would use bitcoins instead of gold for money transfer today but apparently not! Someone left 3Kg of gold on a train in Switzerland recently.)
It’s good to share
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Are cash payments dying out?
Read the winning essay of the 14-15 age group in the London Institute of Banking and Finance Young Financial Journalist competition. In his winning article Mukund Mahendra Soni looks at how currency has evolved over time and the ways a cashless society would impact us.