Welcome to issue 55 of Payments, Payments, Payments - this week we feature Imran’s vision, Andrea’s insights, Italian payment nutshells, ATM withdrawals in pictures and numbers, a blank piece of plastic and a new Chair.

Imran’s vision for Open Finance, encouraging ‘premium’ APIs, and whether Open Banking is actually working.

After years of promises, regulatory back and forth, and campaigning by both supporters and critics, Open Banking is today used by millions of people and businesses to manage their finances—most of whom have never even heard of ‘Open Banking’.

It really shows that if you give people the tools to safely and securely look after their data, or take control of their data, then that's what they're going to do.

Imran Gulamhuseinwala

Imran Gulamhuseinwala tells Altfi that the latest 2m milestone from the OBIE indicates adoption is currently doubling every six months, and he remains “blown away” at the huge ecosystem of 300+ authorised entities, from Fintechs to challenger banks to alternative lenders, who are building on Open Banking APIs.

Read: Altfi’s interview with the champion of Open Banking who shares his thoughts having just passed 2m users.

Emerging Payments Association’s Insights Interview: Featuring Andrea Dunlop, the Chair of the EPA Advisory Board.

Discover what drives the Emerging Payments Association’s Chair, Andrea Dunlop, what dangers she thinks lie ahead in payments, and what she’d say to a graduate thinking about joining the payments industry.

Andrea is always outspoken and speaks from the heart. Hear her speak passionately and assertively as never before.

Road to a cashless society: the Italian journey and the recent government measures

This week we are pleased to feature a guest blog by Marco Folcia, Sara Marcozzi, Tommaso Gheduzzi and Niccolò Polcri from PWC Italy.

Evolving consumer preferences and digital transformation are boosting European cashless transactions. The Covid-19 pandemic has accelerated this trend, exploiting a need for safer and more convenient payment methods both for remote and physical transactions. However, cash remains the preferred means for payments in Italy.

Source: PWC.

Nevertheless, according to the key figures, customers and merchants are less eager to “switch to cashless” and adopt new digital payment instruments.

The Italian Government has approved regulatory measures with incentive programs that aim to increase the user adoption of cashless payments throughout the entire supply chain. Such incentives include but are not limited to cashback on card spending for consumers, fee reduction for micro-payments, and as of the 1st July 2020, a tax credit for transactions made by cards for merchants. These actions reduce the cost of managing cash, which is estimated to be around 10 billion EUR/year for the Italian economy.

Additional regulatory measures have been, or will soon be, implemented to discourage the use of cash (e.g. as of July 2020, the threshold for cash usage in a single payment was lowered from 3,000 EUR to 2,000 EUR, and will be further reduced on January 2022 to 1,000 EUR) and promote the usage of payment cards (e.g. 10% cashback – up to 3,000 EUR spending – for consumers using credit and debit cards for their purchases in stores – online shopping is excluded). Even though, the Italian Government is also implementing toolkits and tutorials to support the financial education of citizens; further initiatives should be undertaken to boost consumers’ bent for digital payments and improving their understanding of financial products and concepts and developing skills and confidence to become more aware of risks and opportunities of making electronic payments.

Despite the Government’s previously mentioned efforts, there is still room for improvement in terms of the merchant’s acceptance of electronic payments: tax advantages and cost of acceptance are the main levers that may be used to enable a digital payment ecosystem. As a last resort, to foster POS terminal usage, additionally, application of sanctions could pursue merchants to accept digital payments (for micro-payments in particular) offering equal opportunities to consumer willing to pay electronically.

Assuming a scenario in which Italy reaches a digital payments penetration at 80% (similar to bests in class in EU) and combining the actual governmental and private measures plus the levers of acceptance, it is expected that the Italian GDP would increase by nearly 1.5%[7]. Such a scenario would also imply a reduced shadow economy and a heightened financial education that resembles other advanced economies[8].

Moreover, the current pandemic scenario should speed up the adoption of digital payments, not only for remote transactions: for instance, in-store mobile payments saw a +80% year-on-year increase in the first half of 2020 (with a +97% for NFC contactless payments)[9], tracing the groove for a decisive acceleration.

A fast track to a cashless society could also be represented by the consolidation of the Italian payments market and the creation of new technological and digital innovation hubs which compete on a larger scale (e.g. Nexi and SIA transaction). Such events facilitate the penetration of electronic payments in Italy and contribute to the acceleration towards a cashless society, in favor of citizens, enterprises and Public Administrations.

Italian cashless payment decisions reflect Italy’s culture and available options pertaining to payment solutions and associated fees. The success of Italy’s journey towards becoming a cashless society is reliant on the active participation of consumers, merchants, and financial operators to achieve a cultural shift that enables long-term benefits for the Country.

To read the full article visit: Road to a cashless society: the Italian journey and the recent government measures.

Marco Folcia is a a Partner in the Milan office of PwC, with over 20 years of experience in advising Financial Services Institutions with a focus on business models, digital transformation, customer centricity, cards and payments. Marco is responsible for the FS Strategy & Operations Practice and EMEA Payments & OpenBanking Leader.

Road to a cashless society: the UK’s journey.

Another week and the red line of ATM cash withdrawals is as stark as ever - sticky digital payment habits have been formed during the pandemic.

In pictures:

New ATM use infographic this week from but data shows sharp 2020 reduction in ATM withdrawals remain.

In numbers:

Source (both images): LINK.

A small favour…

It is almost six months since I launched the Payments, Payments, Payments newsletter and I’m continually amazed at the subscriber numbers and the great feedback I’ve received.

In a bid to continually develop the newsletter I sent out a survey over the weekend - thank you to everyone that responded to the survey.

If you have yet to provide me with feedback the survey is still open, Survey Monkey tells me it’ll only take 3 minutes of your time to complete the survey and your feedback will be a massive help to me as I keep developing my newsletter.

Please click the link below and let me what you think:

Newsletter survey

Blank credit card with no code imprints

Garanti BBVA has begun issuing a rewards-based credit card that stores credit card numbers, expiration dates and CVV codes on a separate mobile app, rather than on the physical card itself.

Customers of the Turkish bank can already apply for the new Bonus Diji card digitally and have it approved in a matter of minutes without the need for a physical signature.

Once approved, customers will be able to start shopping immediately thanks to the built in QR and mobile payment features without having to wait to receive the physical card.

At what point does the card become pointless?

More: Blank credit card.

Pay.UK appoint a new chair

Pay.UK, the UK retail payment systems operator, have announced the appointment of Mark Hoban as the new Independent Non-Executive Chair of its Board of Directors.

Mark brings a wealth of experience in both public and private sectors, with a strong background in financial and regulatory arenas. Following a career in politics as Member of Parliament for Fareham where he held ministerial roles as Financial Secretary to the Treasury and Minister of State for Employment, he has spent the last five years working at Board level in highly regulated organisations including Flood Re, the Jersey Financial Services Commission and the London Stock Exchange.

More: Mark Hoban | Pay.UK Chair.

The New Economics of Banking - How to make money and diversify your revenues in a zero interest rate economy

This morning Sam Woods (Deputy Governor and CEO, Prudential Regulation Authority) published a letter to chief executive officers to request information about firms’ operational readiness to implement a zero or negative Bank Rate.

The letter from the Bank of England states:

For a negative Bank Rate to be effective as a policy tool, the financial sector – as the key transmission mechanism of monetary policy – would need to be operationally ready to implement it in a way that does not adversely affect the safety and soundness of firms.

Sam Woods, Deputy Governor and CEO, Prudential Regulation Authority

As well as being ‘operationally ready’ firms need to consider how they will make money in a zero interest rate economy.

Join Manifesto Growth Architects for the launch of 'The New Economics of Banking - How to make money and diversify your revenues in a zero interest rate economy'.

Manifesto believe banks are facing an existential choice - will they rebalance the trust equation with their retail customers and rebuild their relationships and customer engagement or will they slide into being infrastructure and utility providers that serve other companies with better customer-centric capabilities?

Manifesto examine what commercial leaders have to do; what the real burning platform is; and outline what the five key requirements are:

• Rebuilding the trust equation

• Harnessing first and third party data

• Designing and delivering experiences to increase customer engagement

• Pivoting to service led propositions that grow recurring revenues

• Implementing metrics that deliver success

Manifesto ask, how do these businesses really make money, and what are the big pitfalls to avoid?

Join Manifesto on Zoom - October 20th, 2 pm GMT / 9 am EST for the launch of their report 'The New Economics of Banking - How to make money and diversify your revenues in a zero interest rate economy'.

The webinar is hosted by Manifesto’s Jo Levesque with panellists including Director of Change, Data & Analytics of Nationwide, David Leon and Fintech & Innovation Advisor Alexa Fernandez.

For more information and to register click here: Manifesto Webinar: The New Economics of Banking - How to make money and diversify your revenues in a zero interest rate economy'.

If money is on your mind…

The latest Current Account Switch marketing campaign focusses on the message “if money is on your mind, having the right bank account is important”. 

The ‘Switch Guarantee Guy’ returns to explain the key benefits of the Current Account Switch Service for both individuals and businesses.

In brief

• A step closer to the creation of a digital euro.

• Webinar: Thriving in the workplace during and after COVID-19.

• Inside Monzo 2.0 with Sifted.

• Incentivising CBDC adoption with a red envelope.

• Cool feature in Apple Maps.

• 3D Secure ‘tap to approve’ from Monzo in action - cheeky Dominos denied.

• Petal launches credit card for people with poor credit.

• Visa connects with Stripe for B2B payments.

• Wisepay: school payments service hit by cyber-attack.

• QR credit card from Venmo.

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Thanks

Mike