The Future of Payments Review, authored by Joe Garner, was published in November 2023 as part of the Autumn Statement. The report provides a number of recommendations to delivering a world leading retail payments ecosystem.
The review focused on how people pay for goods and services at the point of sale instore and ecommerce, and also person-to-person payments. Cash, corporates, crypto, and BNPL are out of scope.
The report concludes the UK payments landscape is in a good position, with a long track record of security, reliability and resilience, and a leader on innovation in areas such as real time payments and Open Banking.
However, multiple ongoing major initiatives, including Open Banking, New Payments Architecture and Central Bank Digital Currency, mean the UK’s payment landscape is lacking ‘a North Star’, with no clear or agreed vision of what they aim to achieve in aggregate.
Therefore, the strongest recommendation is that Government develops a National Payments Vision and Strategy, with the primary aim of simplifying the landscape, and high-level guidance on key priorities, so regulators and industry can align on their delivery.
Consumer experience is quick, easy, free and reliable but with scope to improve:
- Purchasing payment experience from a consumer point of view, both in-person and online, is one of the best in the world.
- Attributed to a mature banking, cards, and digital wallets environment.
- Recommendmoving SCA requirements from detailed technical standards to an outcomes-based approach to improve consumer shopping experience.
Open Banking has benefits for consumers and businesses, and progress should be accelerated:
- Merchants and retailers are frustrated by costs of card payments and the lack of viable alternatives.
- The report says that although there is some evidence that card costs to merchants have increased, no data indicated costs are out of line with relevant international comparators.
- The absence of an alternative payment method is a key driver of dissatisfaction.
- Acknowledging strong merchant frustration, the report recommends the PSR completes card fees investigation.
- Regardless of this outcome, the report recommends improving the UK bank transfer payment process, primarily focusing on Open Banking, to provide an alternative to card payments for businesses, and improve person-to-person payments.
- Must enhance consumer protection, not necessarily to the same level of cards, but with minimum form of dispute resolution to drive adoption, and adjust the commercial model to ensure sustainability.
Regulatory coordination would further improve payments environment:
- The UK benefits from a well-developed regulatory environment and is unique in having dedicated payment systems regulator.
- The landscape is very complex with multiple industry and regulatory bodies –creation of National Payments Vision and Strategy will improve alignment and prioritisation.
Tackling fraud and scams:
- Half of respondents raised fraud as an issue, and half of those raised concerns regarding Authorised Push Payment fraud rules and the possible adverse outcomes, such as increased friction in payments resulting in abandoned checkouts.
- Recommends PSR to assess the costs and benefits of the new APP fraud rules 12 months after implementation. More broadly, Government to set a more ambitious fraud crime reduction target beyond 2024, with a focus on preventing fraud and scams in the first instance.
Government engagement with Big Tech:
- Technology, and Big Tech in particular, are redefining payments and financial services more broadly e.g. rapid adoption of digital wallets.
- Government should take a more coordinated approach to engagement on high priority issues relating to Big Tech.
FAQs
The future of the Payments industry is decidedly digital. With the surge in fintech developments, consumers and businesses are quickly adapting to cashless transactions. The use of mobile wallets, digital currencies, and open banking systems are expected to dominate the industry.
What is the payment success rate? ›
'Payment success rate' refers to the percentage of attempted payments that are successfully processed. In other words, if there are 100 attempts to make a payment and 90 of them are successful, then their payment success rate is 90%. This is the most commonly understood meaning of 'Payment Success Rate'.
What is the future of electronic payment system? ›
Driven by mobile commerce, mobile wallets will become the most popular online payment method by 2024 globally, accounting for over a third of all payments in that time. In the U.S. alone, mobile wallets are predicted to overtake physical cards as the most popular online payment method in the next three years.
What is the future scope of payment gateway? ›
The Global Payment Gateway Market Size is valued at 29.65 billion in 2022 and is predicted to reach 162.68 billion by the year 2031 at a 21.12% CAGR during the forecast period for 2023-2031. This significant figure underscores the urgency for businesses to invest in payment gateway development.
What is a future payment? ›
A future dated payment instructs your bank to disburse funds to your supplier's bank on a specific date (the maturity date).
What is an example of a standard of future payment? ›
Money acts as a standard of deferred payment. It means payment to be made in future can be expressed in terms of money. Credit is given in terms of money. If a person needs 10 kilograms of rice but does not have the required amount of money with him at the time, he borrows this amount.
Which payment method is most successful? ›
Credit and debit cards: This is the most common payment method used by online shoppers, and it includes Visa, Mastercard, American Express, and others. 2. PayPal: PayPal is a widely used online payment system that allows customers to pay for purchases using their PayPal account or credit/debit card.
What is the most reliable payment method? ›
By and large, credit cards are easily the most secure and safe payment method to use when you shop online. Credit cards use online security features like encryption and fraud monitoring to keep your accounts and personal information safe.
Why do payments fail? ›
What causes payment failure? Failed payments can occur from both the merchant's end and the customer's end. A customer will often experience payment failure due to a faulty internet connection, entering incorrect payment details, or because there is not enough money in their account to cover the payment..
What is the future of faster payments? ›
Faster Payments has grown progressively since 2008 and will soon be the second consumers favourite payment channel after the Debit Card. By 2026 FP will over taking Bacs and Cash.
According to eMarketer, 80.4% of new users adopting mobile P2P transfers between 2023 and 2027 are expected to be from this generation. This trend indicates a significant shift in how future generations will handle money, with mobile payments increasingly ingrained in their daily financial activities.
What will the payment system like by 2050? ›
In 2050, the payments ecosystem (acquirers, PSPs, facilitators, and aggregators) will revolve around creating integrated capabilities within an ecosystem of partners to truly optimise the customer experience and deliver a seamless, personalised payments journey from awareness to purchase and long-term retention.
What is the future of payments? ›
The move to digital
Global cashless payment volumes are set to increase by more than 80 percent from 2020 to 2025, from about 1tn transactions to almost 1.9tn, and to almost triple by 2030.
What is the future of virtual payments? ›
The rise of virtual cards
In fact, new Juniper Research has found that the total volume of virtual card transactions will reach 175 billion by 2028, rising from 36 billion in 2023. This represents an incredible growth of 386%.
Who are the biggest payment gateways? ›
- Local payment collection methods. As well as discussing payment gateways, we'll also look at different options for international payment collection. ...
- PayPal. A household name, PayPal is one of the most trusted options for online sales. ...
- Worldpay. ...
- Opayo. ...
- Braintree. ...
- Stripe. ...
- Amazon Pay. ...
- Ayden.
Q: What is the future of money? The future of money is expected to be heavily influenced by technology. Predictions include the rise of cashless societies, the growth of cryptocurrencies, the continued adoption of digital currencies, and the potential offering of a Central Bank Digital Currency (CBDC) by governments.
What's happening in the payments industry? ›
As we continue navigating the digital age, blockchain technology, mobile payments, cashless payments, and AI-driven fraud detection are among the top trends revolutionizing the future of the payment processing industry. Blockchain promises enhanced security and transparency, making it a potential game-changer.
