Kate Fitzgerald, our Head of Policy, talks about our recent roundtable on the barriers that can stop people using digital payments.
Protecting access to cash for people who rely on it is a priority for us. We’ve worked alongside the Financial Conduct Authority and the government to ensure people continue to have free access to ATM withdrawals in their communities. But people who don’t use digital payments are increasingly at risk of losing out – through higher costs, declining acceptance of cash, or being unable to shop online.
We’re committed to making sure people can get access to cash when they want it. But we also want to help ensure that there are digital payment services that cash-reliant consumers can and want to use. This is why we launched our Digital Payments Initiative with the PSR Panel in 2021.
The Panel published its report on digital payments in May last year. It found that many people who rely on cash have alow income, or other vulnerability. A major factor in their use of cash is the associated importance of avoiding overspending – which the physical nature of cash can make easier to manage. Other factors include a distrust of digital payments due to concerns about fraud, personal errors or privacy. Some people don’t have the relevant financial or digital skills to use digital payments. And some simply don’t have access to digital and financial infrastructure, such as adequate broadband or a bank account.
The Panel made some recommendations, which focused on the potential of open banking account-to-account payments to address people’s needs. We published our response in July, and we’re taking forward a work programme to unlock the potential of account-to-account payments.
We’re also challenging payment system operators to consider the needs of people with limited digital and financial inclusion, working closely with the FCA. As part of this, we’re exploring how a wider set of digital payment types can help people, including people who struggle with smartphones and apps, or don’t have bank accounts.
In November we held a roundtable discussion, bringing together a range of consumer representatives, payment system operators and other industry representatives. Our discussion focused on:
- payment cards that meet the needs of people who rely on cash
- flexible digital bill payments to help those with low and irregular incomes
We spoke about how prepaid cards could be a ‘near-cash’ bridge to people using digital payments (and other financial services) – and what could stop this happening. These barriers include:
- people not being able to get instant information about their spending and card balance
- the need for online or smartphone access to get the full benefit of many prepaid card services
- charges for using prepaid cards
- a lack of awareness and understanding of prepaid card services and their benefits among people on low incomes who rely on cash – and the need for banks and payment providers to communicate with them more effectively
The roundtable also examined the barriers to new ‘request-for-payment’ services. These could give people with low and irregular incomes more control over when and how they pay bills.
We’ve published a short summary of the discussion, and are developing our work plans in light of what we learned.
I’d like to thank those that attended the lively and informative session, and we look forward to an ongoing conversation about these issues.
