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1、Distributed inPublished in association withFO R E I G N TR ANS FE RSR E A DY M O N E YB O DY TA L KFixing the fragmented$250tn cross-border payments marketWhat does the future hold for the pound in the UKs pocket?Biometrics tech could improve payment security but risks remain060911INDEPENDEN T P U B

2、 L I C AT I O N BY02/10/2022#0835RACONTEUR.NETTo give an idea of the impact of making transactions as smooth as possible,a study of online shoppers by the Marketing Science Institute in 2020 found that,on average,they“increased their purchase amount by 17.4%over a period of 12 months after adopting

3、one-click buying”.Given the commercial importance of convenience,the integration of financial products that can work across both digital and fiat currencies will become the norm.Thats the view of Pavel Matveev,co-founder and CEO of Wirex,the provider of a multi-currency payment card offering real-ti

4、me conversion at the point of sale.He says:“Interoperability of payment providers will be key.Companies that have developed crypto-enabled cards will allow users to seamlessly utilise both the physical and digital world of the metaverse.”Matveev believes that the benefits of such innovations could e

5、xtend far and wide.“More than 1 billion unbanked peo-ple worldwide will finally be included within this ecosystem,”he predicts.“With the development of the digital economy,where its estimated that nearly 80 million people own a crypto wallet,this is already starting to happen,although theres still a

6、 long way to go until it becomes a fully mainstream proposition.”James Booth,vice-president and head of partnerships in EMEA for PPRO,which works with global payments platforms,also sees the potential for reaching a new customer base.“Arguably,one of the most valuable pos-sibilities of the metaverse

7、 is that it will pave the way for consumers from emerging economies to access the market,”he says.“Digital assets can be traded through the metaverse marketplace,giving rise to an alternative way of accepting a payment for commerce,promoting inclusivity and creating new streams of revenue that pro-v

8、iders can tap into.”The relationship between crypto and conventional currencies is developing apace.There are numerous ways for con-sumers to change fiat money into crypto that they can spend in the metaverse.But it remains to be seen whether they will want to reverse the process and how easy such t

9、ransactions will prove in any case.The metaverse and blockchain technolo-gy will almost certainly stimulate the development of new person-to-person payment options.Meanwhile,a decision by online video games Fortnite and Roblox to use their own in-game currency that can be bought with either crypto o

10、r fiat currency could offer payment service providers new com-mercial opportunities.In the same way that the first incarna-tion of the internet spawned new types of crime,the metaverse will present law enforcement agencies,regulators and,ulti-mately,payment service providers with several problems.We

11、b 3.0 and the big-bucks theoryAs the expanding metaverse promises to revolutionise the retail experience,payment service providers must rethink how they operate if theyre to seize the opportunities it will offerow to monetise the metaverse?This fast-developing virtual realm could generate up to$5tn(

12、4.2tn)in value by 2030,according to a report pub-lished by McKinsey&Co in June.“The metaverse is simply too big for com-panies to ignore,”the consultancy declared in the research paper,Value Creation in the Metaverse.With businesses around the world preparing to enter it,the commercial potential for

13、 payment service providers seems similarly vast.Harshna Cayley,MD of payment prod-ucts at Barclaycard Payments,notes that most consumers who have sampled what the metaverse has to offer to date“have already made a purchase in the realm,high-lighting the need for retailers to put a pay-ments infrastr

14、ucture in place to support this new commerce channel.For payment providers,its an opportunity to be part of a fully digital ecosystem that allows mer-chants to offer a highly personalised immersive shopping experience.”Some of the biggest players in the pay-ments market are already extending their r

15、each in the metaverse.Mastercard has filed applications for 15 trademarks cover-ing a range of services relating to the metaverse and non-fungible tokens(NFTs),for instance.Visas consulting and analyt-ics division is advising financial institu-tions on their metaverse strategies,while the Visa Creat

16、or Program is support artists,musicians,filmmakers and other creatives as they seek to create NFTs,which are key to monetising their work.And Facebook Pay has been replaced by Meta Pay.Although this service remains much the same,the aim is to create a digital wallet that will ena-ble users to secure

17、ly manage their identities as well as what they own and how they pay.Although this branch of Web 3.0 technol-ogy is still at a relatively early stage of devel-opment,payment service providers are already learning important lessons about what theyll need to offer in the metaverse.Chief among them is

18、that they will need to offer their users a seamless experience.As Mark Zuckerberg has said:“The more easily you can transact,the bigger the opportunity.”Cybersecurity consultancy TrendMicro has identified the possible emergence of what it calls“the darkverse”.It predicts that NFTs will be subject to

19、 phishing,ransom-ware and other attacks as they become an important metaverse commodity to regu-late ownership,while overpriced metaverse real estate and NFTs will provide a new way for criminals to launder ill-gotten gains.Certainly,with growing concerns about the sophistication of fraudsters,the p

20、rovi-sion of rapid,effective and frictionless authentication in the metaverse is a chal-lenge the payment sector will have to accept.“Theres a general assumption that cryp-tocurrencies are a natural fit in the metaverse,but it doesnt really matter what payment method is used,as long as it can be aut

21、henticated,”says Ralf Gladis,founder and CEO of payment service provider Computop.He explains:“In real life,cards are stored on devices and authenticated through face recognition or fingerprint matching,but this could be much harder to achieve in the metaverse.There is a discussion about voice detec

22、tion,which may solve the issue and even help to create a valuable channel for sales and marketing,but it needs to be given a lot of consideration from a techni-cal perspective first.”As the metaverse evolves,its becoming abundantly clear that this isnt simply about conducting ecommerce in 3D.Rather,

23、it will provide an entirely new lifestyle experience.Payment service providers,like brands and retailers,will have to reimagine many of their offerings to make them appro-priate for the metaverse.This effort is likely to be both challenging and expensive.McKinsey estimates that at least$120bn was sp

24、ent on building meta-verse infrastructure in the first five months of this year more than the total outlay recorded in 2021.But,for those willing to accept the challenge and the cost,the return on their investment could be substantial.FUTURE OF PAYMENTSSimon BrookeHPREFERRED PAYMENT METHODS IN THE M

25、ETAVERSEPercentage of gamers who selected the following(more than one response allowed)In real life,cards are stored on devices and authenticated through face recognition or fingerprint matching,but this could be much harder to achieve in the metaverseM E TAV E R S EFiona BondA freelance journalist

26、who writes about all areas of finance and investing.Simon BrookeA freelance journalist,specialising in business,finance and sustainability.Ben EdwardsA freelance journalist who specialises in finance,business,law and technology.Jonathan EvansA journalist specialising in HR,SMEs and C-suite leadershi

27、p.Mark FraryJournalist and author of 12 books,who writes on business,tech and science.Ed JeffersonData journalist and digital creative,who has written for The Guardian.Virginia MatthewsReporter,writer,editor and columnist,for daily and weekly publications.Tom RitchieBusiness journalist specialising

28、in HR,leadership and the future of work.Ouida TaaffeEditor of Financial World,the magazine of the London Institute of Banking&Finance.Daniel ThomasWriter and editor,published in The Telegraph,Newsweek and Fund Strategy.Uneesa ZamanFreelance journalist who has written for The Times,Financial Times an

29、d Amaliah.Although this publication is funded through advertising and sponsorship,all editorial is without bias and sponsored features are clearly labelled.For an upcoming schedule,partnership inquiries or feedback,please call+44(0)20 8616 7400 or e-mail .Raconteur is a leading publisher of special-

30、interest content and research.Its pub-lications and articles cover a wide range of topics,including business,finance,sustainability,healthcare,lifestyle and technology.Raconteur special reports are published exclu-sively in The Times and The Sunday Times as well as online at .The information contain

31、ed in this publication has been obtained from sources the proprietors believe to be correct.However,no legal liability can be accepted for any errors.No part of this publication may be reproduced with-out the prior consent of the publisher.Raconteur Media/future-payments-Contributorsraconteurraconte

32、ur_londonraconteur-mediaOnePoll,Improbably,2021$4.2tnthe value the metaverse is predicted to generate by 2030McKinsey,202247%46%In-game tokens Globally recognised cryptocurrency45%Government-controlled currency45%Metaverse-specific currency 22%NFTsPublishing manager Chloe JohnstonDeputy editorFrance

33、sca CassidyHead of productionJustyna OConnellDesign and production assistantLouis NassEditorSarah VizardDesign directorTim WhitlockIllustrationKellie JerrardChief sub-editorNeil ColeSub-editorsGerrard CowanChristina RyderCommercial editorsLaura BithellBrittany GolobAssociate commercial editorPhoebe

34、BorswellReports editorIan DeeringDeputy reports editorJames SuttonDesignHarry Lewis-IrlamCelina LuceyColm McDermottSamuele MottaSean Wyatt-LivesleyF U T U R E O F PAY M E N T S02Commercial featurenew world of payments is rapidly unfolding,one that is instantane-ous,digital and most importantly,drive

35、n by data.The convergence of technol-ogies,increased regulatory requirements,and a fast growing digital payments ecosys-tem are driving the innovation behind a rapid rise in new ways to pay,and shifting payments to a more strategic weapon for creating new commercial opportunities and transforming cu

36、stomer propositions.With one in four of all UK payment trans-actions processed by NatWest,the bank sits at the heart of both business and personal customer transactions.“For many,payments are viewed as the natural end of a process;but the payments revolution created a seis-mic shift,moving payments

37、to the epicentre of the digital transformation,impacting the economy,society and the lives of individ-uals,”says Simon Eacott,head of payments NatWest.“Payments is the most exciting and rapidly evolving part of the fi nance world;the prime interface between us and our custom-ers enabling us to provi

38、de the smart,simple,and secure payments they need,and which is a crucial element of our differentiation.”As cash payments continue to decline,alternative payments methods continue their The new frontier in paymentsTechnology and innovation is paving the way for a payments revolution,changing the way

39、 banking services functionmeteoric rise in popularity,accelerated by the pandemic.Change is also being driven by industry regulation.The renewal of the UKs central payments infrastructure as well as the Payment Services Directive Two(PSD2),and open banking,aim to increase competition and innovation,

40、while also improving safety and resilience.“Identifying the opportunities and creating the benefi ts,while implement-ing the regulatory requirements is central to the NatWest strategy,”says Eacott.Focus on customer need,not payment needSince the Faster Payments Service fi rst emerged in the UK over

41、a decade ago,it has been on an upward trajectory,revolution-ising payments.However,its what is built on the back of the payment and embedded into the customer journey,the things people do on a day-to-day basis,such as buying a coffee through their app,with a focus on customer need,rather than paymen

42、t need,that matters.Embedded fi nance,the integration of fi nancial services traditionally obtained from a bank within the products or services of a non-fi nancial organisation,has the fl exi-bility and universality to be applied to any company or industry with a transactional element.Examples inclu

43、de online stores offering short-term loans in the form of buy now pay later(BNPL),and digital wallets on smartphones that enable instant contact-less payments.Digital innovation has created opportunities to build more capability into the payment stream,creating a frictionless journey for the custome

44、r and fresh revenue streams for businesses.Eacott adds:“Our focus is on unlocking the power of payments to create value for every customer.”With this level of integration in the world of payments and banking,APIs are driving a digital economy that drives effi ciencies and lowers costs.But this is ju

45、st the beginning,says Dan Globerson,head of bank of APIs at NatWest:“The use of API technology to con-nect systems opens up capability for non-fi-nancial services companies to offer fi nancial services;banking as a service(BaaS)enabling them to lend,for example,through their channels via our technol

46、ogy.Companies now can provide a payment service,a lending service,or a credit service from a bank,but through their customer user interface.”He adds:“We embed the whole payment,the whole banking experience,within a dif-ferent companys offering.And by embed-ding a contract as part of that payment bet

47、ween both parties it introduces trust.We use payments as an agent of change;a cata-lyst to increase value,drive innovation,foster inclusion,and build confi dence in the future of money.”For businesses,embedded fi nance opens up new channels and creates huge The payments revolution created a seismic

48、shiftpayments is the most exciting and rapidly evolving part of the fi nance worldANatWest specialists predict the fi ve key trends in paymentsThe true value of payments dataThe opportunity for better,richer payments data is the single most important point of value to banks and others along the paym

49、ent chain.By unlocking the true value of payment activity data,banks can develop more personalised products in a more secure environment.And in the fi ght against fi nancial crime and fraud,predictive analytics becomes a powerful tool for staying ahead of potential threats,reducing risks,and ensurin

50、g compliance.Tradition being eclipsed by digitalCash payments have been in decline for several years.In 2021,the proportion of UK payments made using cash fell to 15%.Direct debit,a long-established method of paying regular bills appears to be plateauing.While the volume of direct debit payments gre

51、w in 2021,with 4.6bn payments made,it was at a slower rate,according to the UK Finance report 2022.With global smartphone ownership predicted to continue to grow over the next fi ve years,any signifi cant return to traditional payment methods is unlikely.Digital developments drive the payments revol

52、utionThe payments-as-a-service(PaaS)and banking-as-a-service(BaaS)model is gaining traction due to cost-effectiveness and is a fast-moving trend for banks and fi nancial institutions looking to accelerate digital innovation,stay relevant,and avoid losing new and existing customers.Embedded fi nance

53、is one of the most exciting digital developments in the evolution of payments.With consumers demanding fast and frictionless ways to make payments from a variety of devices,from wallets to wearables,embedded payment options can open up new revenue channels for non-fi nancial organisations.A catalyst

54、 for overseas trade for the startup economyIn the payments and movement of money space,its no longer just large corporations that can get involved with instant payments.Faster payments,not just in the UK but across international borders,can be integrated at near zero cost by startups and small busin

55、esses,allowing them to not only drive down the cost of transactions between them and their suppliers,workers,and customers but also take advantage of newer digital tools,embedded lending,embedded payroll and embedded accounts payable.Purposeful paymentsSustainability is at the top of all agendas,inc

56、luding fi nance.Digital transactions have the potential to drive real choice,providing sustainable payment alternatives and support the transition to a net-zero economy.By 2030,of the projects that NatWest helps fund,it aims to at least halve the impact on the climate.Financial inclusion is a hugely

57、 important topic,particularly against the current backdrop of rising infl ation and the cost of living.A big part of the payments evolution is about widening the function of payments to broader sections of society.Richards says:“Its about making sure that our entire customer base have access to the

58、payment capability that works for them.”0102030405of all UK payments were contactless in 202132%the increase in the use of the Faster Payments Service through online banking in 2021 23%UK Finance,2022of adults will use remote banking by 2031 93%opportunities for growth,for example,by helping them ge

59、t more products to market,drive sales,meet growing consumer expecta-tions,and attract and retain customers.Data-driven global payments in real-timeDigital innovation is also transforming cross-border payments,with advances in instant or real-time payments allow-ing people to receive funds from overs

60、eas much faster,aided by schemes and mech-anisms for cross-border connectivity and interoperability.Advanced payment tech-nology provides access to richer payments data,the key to identifying new growth opportunities and becoming a real-world vehicle to drive positive change,not only within cross bo

61、rder payments but also cross-border partnerships.Digital currencies also have a role in the future of payments.Three notable catego-ries include central bank digital currencies(CBDC),being explored globally as an alter-native way of exchanging and settling trans-actions in central bank money.Stablec

62、oins are not central bank money but are linked to or backed by some asset and payment can be made on the back of it,while cryptocurren-cies,such as bitcoin,are more speculative in nature,with values being subject to volatility.Nevertheless,bitcoin is increasingly being accepted as a payment method i

63、n its own right,although far from universally.Frictionless and secureCustomers want great user experience and frictionless payments but they also seek peace of mind,especially at a time when online payment scams,in particular authorised push payments,where individ-uals and businesses are unwittingly

64、 duped into sending money to criminals,are rising.“The importance of trust in the payments arena cannot be underestimated,”says Jessica Richards,head of market develop-ment,payments,NatWest.“Our goal is to implement the right technologies to protect our customers from fraud,while delivering a fast a

65、nd effi cient payment journey.Its vital that we collaborate with the industry and reg-ulators to maintain focus on this critical issue.”A good example is Confi rmation of Payee(CoP),a new name-checking service for UK-based payments,which strengthens pay-ment security by allowing people to verify who

66、 they are sending payments to in real-time.“During the pandemic,NatWest was able to use this service to help government get payments out to people who needed them most,”adds Richards.Protection from fraud,as well as fi nancial crime,which has been in the global spotlight recently,can only be address

67、ed through col-lective and collaborative effort,and at both the industry level and individual bank level,a huge amount of investment and innovation is being channelled into it.The challenge,says Globerson,is fi nding the balance between frictionless and secure.“While customer experience needs to be

68、seamless,creating that balance between frictionless customer experience and appropriate checks and balances along the way is the key to fi ghting fi nancial crime,”he says.Looking to the futureWhat does the payments revolution mean for traditional ways of making payments,including direct debits(DD)a

69、nd cash?With the advent of open banking,alternatives to DD are already making inroads.Request to Pay is a new initia-tive that gives customers greater control over when and how they pay,while variable recur-ring payments(VRP),allow customers to safely connect authorised payment initiation service pr

70、oviders(PISPs)to their bank account to make regular payments on their behalf.Eacott says:“We know there are chal-lenges with some of these changes,and as a responsible fi nance provider our role is to ensure that all individuals and businesses have effective access to payments and that we dont leave

71、 anyone behind.The industry still needs to provide access to cash for those who want and need it.”In an increasingly complex networked payments ecosystem,where cost and infra-structure barriers to market entry are lower and competition is rising,Eacott empha-sises the benefi ts of collaboration with

72、in the industry.He says:“Whilst competition is important to drive innovation,banks and other fi nancial services organisations must work together to accelerate the evolution in payments in a purposeful way and ensure success for the long term.”For more,please visit A C O N T E U R.N E T03CROSSING TH

73、E BORDERTHE US AND CHINA ARE THE MOST POPULAR COUNTRY FOR ONLINE CROSS-BORDER PURCHASESTop three cross-border markets purchased from by consumers,per selected countriesPEOPLE ARE INCREASINGLY BUYING PRODUCTS FROM OUTSIDE THE UKShare of adults purchasing online from sellers of goods and services,by l

74、ocationBANKS REMAIN THE MOST-USED METHOD OF MAKING CROSS-BORDER PAYMENTSShare of consumers and small businesses across 15 countries globally saying they use the following payment methodsBUSINESSES TRANSACTING ACROSS BORDERS IS ON THE RISEB2B global cross-border payments flows,in US$tn(*forecasts)THE

75、 COSTS OF CROSS-BORDER PAYMENTSRussiaAustraliaNigeriaMexicoUKIndia2018201920202021*2022*150140130120110100100%90807060504030201002009201020112012201320142015201620172018201920202008CONSUMERSSMALL BUSINESSESBank(mobile app)3738Bank(website)5227Bank(in person)2218Digital wallet firm(website)2518Money

76、transfer firm(mobile app)2833Money transfer firm(website)2919Money transfer firm(in person)1617Cheque1411Cash1266.09%35%10.94%The average cost of a cross-border payment in the first quarter of 2022.The G20 wants to cut this to 5%The proportion of payment corridors with average costs of less than 5%T

77、he average cost to conduct a cross-border payment with a bank-the most expensive optionChina37%Spain2%USChinaUS50%ChinaUKCanada47%12%9%ChinaUSGermanyChinaUSUK43%20%9%62%18%9%AustraliaUSHong KongUSChina15%15%28%4%5%80%JapanAustraliaUSUKUSChina24%13%12%31%28%13%World Bank,2021ONS,2021IDC,2021EIU,2022E

78、Y,2021Digital wallet firm(mobile app)4346UK sellersSellers from EUSellers from rest of the worldCross-border payments financial transactions where the payer and recipient are based in separate countries are growing in economic importance.The value of both the retail and wholesale market is expected

79、to grow from$150tn(130bn)in 2017 to more than$250tn by 2027,according to projections by the Bank of England.But the systems to enable such payments can be slow and expensive for several reasons,from a lack of competition to legacy tech platforms and fragmented data.Thats why improving them is a prio

80、rity for the G20 as it looks to boost global tradeChinaF U T U R E O F PAY M E N T S04Commercial featurenature of an APP fraud is that someone is making a payment to the intended recip-ient because theyve been socially engi-neered and duped through a scam to make the payment.This means that many of

81、the various checks and balances that we have at the moment,like confi rmation of payee,dont work for APP because the payment is being made to the intended recipient.QJHWhat other risks are created by real-time payments?Financial institutions with legacy technology systems might struggle KPMGs global

82、 forensic technology lead Paul Tomblesonand co-lead of KPMG UKs fi ntech team John Hallsworthdiscuss the new fraud risks of real-time payments and how fi nancial institutions can mitigate themwith upgraded real-time payments infra-structure,particularly around AML trans-action monitoring.The faster

83、the pay-ments are,then the harder it is for banks to be able to monitor transactions and genuinely be able to stop fraud and fi nan-cial crime from happening.Its a huge challenge because most traditional banks have legacy systems and legacy data,which at the moment probably isnt good enough to keep

84、pace with the speed at which payments are now being made.The risk of payment errors is also greater as payments get faster.QPTHow can fi nancial institutions reduce the risk of fraud with real-time payments?The most effective way of fi ghting fraud and fi nancial crime in real-time pay-ments is thro

85、ugh good quality data and look-ing for patterns and trends.However,the kill chain for a fraud doesnt start with the banks,it often starts with a text message(a smish-ing attack)or a bogus investment website.This means that fi nancial institutions dont have end-to-end visibility of the fraudulent act

86、ivity and therefore it is vital that there are mechanisms in place for information and intelligence sharing between market partic-ipants and across sectors as well,not just banks.There are several initiatives in the UK looking at the creation of a central utility of data that could spot potential fr

87、aud patterns.Once you start to aggregate and triangulate that data,you often see a very different pic-ture than you would in just one bank.Even if you only had the top 10 banks in the UK doing it,that would have a meaningful effect on the amount of fraud that is detected.QPTWhat role is technology p

88、laying in tackling fraud and fi nancial crime in real-time payments?Technology has always had a vital role to play in the fi ght against fraud,and now more so than ever.Many fi rms are already deploying supervised and unsuper-vised machine learning models,behavioural analytics and social network ana

89、lysis to look for the known and unknown characteristics of fraud and fi nancial crime in transactional data.This needs to be underpinned by good quality and reliable data.Thats poten-tially an area where paytech fi rms are at an advantage because theyre not encumbered by the legacy systems that trad

90、itional banks have.When youre starting with a blank sheet of paper and building an IT infra-structure that is cloud-based and embed-ded with advanced analytics,you can put all your investment in that rather than having to clean up legacy data.QJHHow will the threat landscape evolve as real-time paym

91、ents become more prevalent?The one thing about fraudsters is that they tend to be quite innovative,and so if you shut down one avenue,another one opens up.This is never a static set of risks,so while we dont know what the biggest fraud will be in fi ve years,it probably wont be any-thing like the th

92、reat landscape that exists today.That means banks need good quality data so they can monitor trends to put them-selves in the best possible position.If your data is poor quality and you dont know what your fraud losses are,then youll always be on the back foot.One interesting emerging area is crypto

93、 which,by its very nature,has a completely separate infrastructure to fi at currency.This introduces new threats,for example it will become increasingly diffi cult to understand a customers overall behavioural pattern to identify criminals without also looking at the payments they are making in cryp

94、to.As the whole payments system speeds up then this interface between fi at currency and crypto will evolve and present new threats.Q&AQPTWhat are the main fraud risks associated with an increase in real-time payments?The faster that payments are,the faster the fraud.Thats one of the biggest tension

95、s and dilemmas that the industry is facing at the moment to be better at preventing fraud,certain types of payments are probably going to have to be slowed down.But the single biggest fraud type in the UK over the past 12 months is APP authorised push payment fraud,such as romance scams or investmen

96、t scams.Those are incredibly diffi cult to stop as the Faster payments,faster fraudhe real-time payments market has been growing rapidly.More than 118 billion real-time trans-actions were made in 2021,according to ACI Worldwide and GlobalData research up from 70 billion in 2020.That number is expect

97、ed to grow to more than 427 billion in 2026,equivalent to around a quarter of all global electronic payments.Demand for real-time payments has also been growing among consumers and busi-nesses alike as the macroeconomic back-drop sours and interest rates start to rise.“When rates were low,nobody rea

98、lly cared if it took days to transfer their money to someone else,but now rates are rising,people are chasing interest rates,”says Peter Harmston,head of payments at KPMG UK.“Because of the macro climate,people are starting to ask questions:why isnt my money moving quicker,and who is taking advantag

99、e in between?As consumers,that is a very different conversation than we would have had nine months ago.”For businesses be it large corporations or small and medium-sized enterprises(SMEs)real-time payments are increas-ingly important for managing liquidity and working capital.“For the SME segment in

100、 particular,with the current looming recession and the cost-of-living crisis,cash management is critical,”says Harmston.“If Im a plumber,say,being able to do a request to pay that allows me to request payment immediately will become even more important in this environment.”Given that increased deman

101、d,the UK is currently developing the New Payments Architecture(NPA)the next generation of real-time payments that will replace the current Faster Payments scheme,with migration starting in 2024.“The UK was one of the fi rst to adopt real-time payments in 2008,and was seen at the time as a world lead

102、er,”says Harmston.“Now,there are well over 50 countries that have real-time payments.So the UK is looking to leapfrog ahead again and introduce the next iteration of real-time payments infrastructure.”One advantage of the new infrastructure is that it is designed to improve the quality and amount of

103、 data that can be sent with any The opportunities and threats of real-time payments 4.0The UK continues to lead the US on the development of real-time payments,but the potential for instant cross-border global payments remains a long way offpayment message,using the so-called ISO 20022 payments stan

104、dard.“The richness and extent of data that ISO 20022 will transmit should allow banks to reduce their costs,because they can use that data to increase straight through processing and gain more insights about their custom-ers,”says Harmston.“For corporates,it can help automate payment reconciliations

105、,and for governments,it can help them better capture tax data and opens up the possibility of real-time tax collection in the future.”The new payments architecture will also enable greater accessibility and simplifi ed onboarding which we hope will increase the number of directly connected players a

106、nd increase innovation and competition,”says Harmston.The new infrastructure will bring world class levels of resilience,availability and security.These aspects are absolutely fun-damental from the regulators perspective and vital to ensuring the UK remains at the forefront of real-time payments tec

107、hnology-thats what the NPA brings.”While the UK is seeking to remain at the cutting edge of real-time payments,the US has continued to lag due to its mar-ket-driven environment,although progress is being made.“The difference in the US is nothing is ever mandated,its all market-driven compared to the

108、 industry mandates in the UK.The US will adopt things when were ready to and the market demands it,”says Courtney Trimble,global leader for payments at KPMG US.“Then theres the fact that we have approximately 16,000 fi nancial institutions.Its an absolute behemoth,so the combination of sheer size an

109、d complexity coupled with a market-driven environment is the reason why the adoption of real-time payments has lagged.”The US is starting to make progress,how-ever.In 2017,it went live with real-time pay-ments through The Clearing House,which caters to the countrys largest commercial banks such as C

110、itibank,JPMorgan Chase,Wells Fargo and Bank of America.“We still havent got that ubiquity,so usage is not where it needs to be,”says Trimble.To address that lack of ubiquity,the US Federal Reserve is developing a real-time payments network called FedNow,which is currently being piloted and is due to

111、 be rolled out by the end of next year.Once live,that will extend real-time payments capability to all other banks across the country.“Thats really going to be the game changer in the US in terms of traction and for usage when a larger number of banks have access,”says Trimble.While individual count

112、ries are getting to grips with real-time payments,it remains a challenge to send money instantly across borders.“From a wholesale banking per-spective,cross-border payments are still quite traditional and quite costly true cross-border real-time payments are a long,long way off,”says Harmston.“While

113、 we are getting more standardisation with ISO 20022,each country has its own spin on that.So theres still a lot of work to be done to get proper interoperability.”Part of the problem is that rules and reg-ulations vary according to jurisdiction.“If you look at governance,theres no governing body for

114、 cross border,”says Trimble.“How do you properly roll out cross border without a governing body?So we need to fi gure out all the rules across the different jurisdictions,and banks in those different jurisdictions will also need to be collaborative.So when you talk about cross border,we need standar

115、d-isation and synchronisation across govern-ance,compliance and operating models,and there have to be some guardrails around it.”There are also concerns about the impact of real-time cross-border payments on exchange rate stability.“From a macro perspective,if money can move in real-time cross borde

116、r,then capital fl ows can occur very,very quickly,”says Joe Cassidy,head of fi nancial services strategy at KPMG UK.If a country was under economic stress and people could transfer money instantly out of the country with no frictions or speed bumps,that velocity could be destabilising,he says.“It co

117、uld potentially result in systemic risk,”says Cassidy.“Real-time capital fl ows just whizzing around the world with fi nality and without any checks and balances in them is clearly not governable.And the conse-quences of that nobody really knows.”There are potential opportunities cre-ated by cross-b

118、order real-time payments.First,it can help reduce transaction costs.Also,if payments arrive instantly,it removes the need for clearing agents to hold as much capital against that exposure while the pay-ment is in transit,Cassidy says.A third bene-fi t is that it potentially widens the perimeter of t

119、rade by making it easier to transact across borders,boosting the real economy.Harmston believes real-time cross-bor-der payments are more likely to develop regionally fi rst where trade is driving pay-ments activity,such as in the Nordics.They are aiming to get three countries ini-tially live facili

120、tating real time cross border payments which will encourage trade and growth in the region he says.if the bulk of your trade is with your neighbours,it kind of makes sense to do it regionally where you can get some real advantages,rather than trying to standardise payments between countries that don

121、t trade much with each other.”Banks are also trying to fi gure out how to best make use of the data generated by the next generation of real-time payments.“Real-time payments are all about speed and data youre talking about 30%to 40%of additional contextual data with ISO 20022,so every bank were tal

122、king to is thinking about how to monetise the data and what the value proposition is for their clients,”says Trimble.The growth in real-time payments and the potential impact that has on existing rev-enue streams means banks are also having to rethink how their business models might work in a world

123、of instant transactions.“If you make a real-time payment,the bank becomes more of a utility through which the payment passes,”says Cassidy.“In that sce-nario,the bank is moving away from inter-est-bearing income towards fee-based income and so the question becomes,what does it charge for payment tra

124、nsmission?Thats a real challenge for banks.”The prospect of real-time payments and the acceleration of capital fl ows is reviving discussions about the potential for an intr-aday market for interest rates where banks could move money into higher interest-bear-ing markets for very short periods of ti

125、me,says Cassidy.Another area where banks could poten-tially try to create new revenue streams is by offering secondary services for trade-re-lated payments,such as help with tariffs and duties or insurance.“Banks are going to need to look at how they can extend and expand their offering into those v

126、alue-added services areas that they dont provide today,”says Cassidy.To learn more,visit home.kpmg/uk/en/paymentsFor the SME segment in particular,with the current looming recession and the cost-of-living crisis,cash management is criticalThe most effective way of fi ghting fraud and fi nancial crim

127、e in real-time payments is through good quality data and looking for patterns and trendsTPaul TomblesonJohn HallsworthR A C O N T E U R.N E T05Real estateFinance and insuranceIndustrial or manufacturingTechnologyAverage34.1%28.2%26.4%20.2%24.7%Faster payments in progressBusinesses are showing intere

128、st in the slick processes used to facilitate consumer purchases to update their clunky systems umbersome and costly,the busi-ness-to-business(B2B)payments process remains far from ideal.Many transactions are still paper-based:in the US,almost 25%of B2B payments are made by cheque,according to a surv

129、ey of CFOs by Pymnts.And the reliance on man-ual tasks increases the risk of errors.In con-trast,in the business-to-consumer(B2C)world the payments process is becoming faster,cheaper and frictionless.This has come about since the emergence of embedded payments technology,which allows any company to

130、provide payments services.Now,B2B businesses are consider-ing how the technology could reduce ineffi-ciencies in their payments transactions.“The big problem with B2B payments historically is that the data is disconnected from the payment,”says Todd Clyde,CEO at Token,an open-banking platform.“Ac-co

131、unts receivables departments match in-voices to payments and if a payer inputs incorrect details it makes the reconciliation very difficult.”Embedded payments can resolve this by embedding a request to pay link on an in-voice.This encodes the invoice with all the data that needs to travel with the p

132、ayments,simplifying the reconciliation process.“Thats the real killer application that will change the B2B payments space,”says Clyde.And embedded payments can make it easier for sellers to integrate payments capabilities into their accounting systems.“In the past,you had to buy an enterprise resour

133、ce planning(ERP)system or an ac-counting package,then make a separate payments decision to integrate it.Those payments projects were always very large and complicated,”says Clyde.“Embedded payments companies are pre-integrating with those accounting packages and ERP systems,streamlining the process.

134、”Some B2B companies are further ahead with embedded payments than others.Pay-payments platform.“If youre running pay-roll at the end of the month for 10,000 em-ployees,thats a lot of data entry and a lot of room for mistakes.”By embedding pay-ments into payroll software,that process can be automated

135、 without users needing to leave the payroll platform or log on to their banking website.“Embedded payments are most success-ful when people can use software and pro-cesses theyre familiar with and use every day without having to think about a sepa-rate process for a payment,”says Tom Kelly,strategic

136、 lead at payments platform Modulr.Embedded payments technology is also enabling startups to build their business models around payments from the ground up.One company that is innovating with embedded payments is financial wellbeing app Wagestream.It allows businesses to offer employees flexible acce

137、ss to their wages,for instance if they need a cash ad-roll software providers,for example,were among the first to use the technology.“The way that payroll worked 10 years ago was that someone would manually log into their banking portal and initiate each payment,”says Anthony Oduwole,chief technolog

138、y officer at Verto,a cross-border vance ahead of payday.By embedding the payments process within the app,employ-ees can draw down money as they need it,helping them better manage their finances.According to Clyde,B2B companies have been slower to adopt embedded payments technology because its provid

139、ers have fo-cused on the consumer market,where there is a higher volume of transactions.In addi-tion,B2B businesses are less concerned with conversion rates,which is when cus-tomers add items to their shopping basket but then change their minds before com-pleting their purchase).“For consumer-focuse

140、d ecommerce sites,cart abandonment is a big issue,”says Clyde.“But for B2B companies,conversion rates are not quite as important if your company just bought some goods or servic-es from me,you have to pay for them.So there hasnt been as much focus on conver-sion rates or speed of payment.”Ben Edward

141、sCPymnts,Versapay,2021Online B2C sales platforms tend to re-vamp their websites more often than those in the B2B market,which has also slowed adoption.“Take the fashion industry,”says Jacob Rider,co-head of payments practice at con-sultancy Projective.“They update their websites constantly with the

142、latest trends.If youre selling screws to builders,though,you might not have changed your website in 15 years.So the development cycles are much longer in the B2B space.”Market participants expect the use of em-bedded payments to accelerate in B2B,as broader embedded finance trends become more common

143、 in the consumer economy.“The people who are running these busi-nesses are consumers themselves,so their expectations start to converge around what service providers can offer,”says Kelly.“With consumer products,you receive push notifications to your mobile about your spending.In the B2B space,those

144、 notifica-tions could then trigger other processes that are predefined.”If a business receives funds from one cus-tomer,that could then trigger a payment to another supplier,effectively automating cash flows,Kelly says.The boom in embedded buy-now-pay-later services for consumers could also be appli

145、ed to the B2B market,which would potentially speed up the traditional trade credit process.“In the B2B space,the ability to get buy-now-pay-later trade credit or even a longer-term loan from the site where youre purchasing your goods removes the need to shop around for the best interest rate or do a

146、ll the application paperwork.It makes it a seamless experience,”says Rider.Sellers could also embed other financial services,such as insurance products,into their platforms.“On the buy side,if you need to purchase a product or service with a deposit or to pay the full balance upfront,you might want

147、to take out insurance against the company going bust before the order has been ful-filled,”says Rider.While there is no data that shows the cur-rent adoption of B2B embedded payments,the broader embedded finance market is expected to grow to$7tn(6tn)over the next decade,according to a report pub-lis

148、hed last year by Pymnts and Fispan.“Were just at the starting point of the journey.We havent reached the tipping point yet,”says Oduwole.E M B E D D E D F I N A N C ETHE B2B PAYMENT MARKET IS RIPE FOR INNOVATION Percentage of firms payments made by cheque since March 2020 Where embedded payments are

149、 most successful is where people can use software and processes that theyre familiar with and use every dayBad optics:the screened-outconsumersThe proliferation of touchscreen terminals and other tech lacking accessibility features is causing consternation among disability charities.The industry has

150、 much to lose by ignoring the needs of vision-impaired people ore than a decade since the Royal National Institute of Blind People(RNIB)started its Make Money Talk campaign to improve the accessibility of banking services in the UK,there are more than 10,000 talking ATMs nation-wide.Over the same pe

151、riod,several other initiatives,such as braille communications,audio statements and voice-assisted digital banking,have helped to make life easier for partially sighted customers.Yet,with point-of-sale(POS)keypads being replaced by touchscreen terminals in settings as diverse as retail,transport and

152、hospitali-ty,the 2 million people living with sight loss in this country are facing new barriers to their financial security and independence.“The payments industry has made real progress in ensuring that blind and partial-ly sighted people arent left behind in the race to make on-the-go purchasing

153、as fast as possible.I like to think that this is because it cares about inclusion,”says the RNIBs chief operating officer,David Clarke,who has held senior roles at Clydes-dale Bank.“But,given the astonishing proliferation of new mobile channels,it can no longer be assumed that people with limited si

154、ght can make electronic transac-tions as safely and easily as everyone else.For both moral and commercial reasons,this situation needs to change.”Aside from criticising terminals built without tactile keyboards or audio facili-ties,Clarke points to“poorly designed com-mercial websites”,many of which

155、 lack basics such as text magnification facilities.This makes it harder for users with vision impairments to place orders.Another significant new barrier to acces-sibility has been the banks increasing use of debit and credit cards without embossed numbers.The claim is that these cards will need rep

156、lacing less often and are therefore a relatively green choice.Nonetheless,some players are bucking this trend.Released last year with the RNIBs endorse-ment,Mastercards Touch Card incorpo-rates a series of notches to indicate whether it is a credit,debit or prepay-ment card.It can be used both at po

157、ints of sale and in ATMs.NatWest and Nationwide have adopted similar approaches.These,Clarke believes,offer a“simple but effective”template for others in the industry to follow.The Financial Conduct Authority is plan-ning to introduce a new so-called consumer duty next year.Designed with the goal of

158、 setting higher standards of customer pro-tection,this is set to improve service levels throughout the sector.It will also highlight the potential gains to be made by companies that are willing to move accessibility to the top of the agendas,according to Briony Krikorian-Slade,prin-cipal responsible

159、 for card payment strategy at trade association UK Finance.“The scheduled introduction of new con-sumer legislation next year has sharpened the industrys focus on the importance of safe transaction,”he says.“But,when an unfamiliar machine is thrust at you in a packed restaurant,the harassed waiter w

160、ont have a clue whether it has a screen magnifier or not,let alone an earphone jack.You may end up giving out your PIN just to get the bill paid without any further hassle.”Maxine Pritchard is head of financial inclusion and vulnerability at HSBC UK,which offers,among other things,accessi-ble cards

161、and readers for making online payments,along with support from a spe-cialist banking team.She agrees that a more robust focus on tech standardisa-tion by all concerned would help instil greater trust in the new generation of POS payment devices.“We appreciate that customers with visual impairments m

162、ay still feel vulnera-ble when making purchases.To make their experience as seamless as possible,its important for both the financial services providers and the merchants involved to ensure that theyre providing accessible journeys,”Pritchard says.“While HSBC UK is the facilitator of purchases,its e

163、qually important that the merchants screens and other POS technologies meet the same accessibility standards.”Recent advances in payment authentica-tion particularly those based on face,voice or fingerprint recognition give the RNIB hope for the future,but challenges remain,according to Clarke.“As l

164、ong as all parties involved in these developments work to agreed standards,new trends in biometric and speech output technology will not only be immensely helpful to blind and partially sighted con-sumers.They can also be a great leveller for the banking industry as a whole,”he says.“Yet,despite the

165、 clear intention to give everyone the same access to secure pay-ments across all channels,there are still devices,apps and websites out there that dont allow this to happen and we will continue to point this out.”responding to the needs of all customers,”she says.“With challenger banks appearing and

166、 the level of account-switching increas-ing slightly in recent years,providing excel-lent customer service has become a clear differentiator between competitors.”While there is no legal requirement for pay-ment terminals at the POS to offer accessi-bility features,Krikorian-Slade believes most vendo

167、rs understand their importance to customers with sight loss.“Retailers should recognise that termi-nals in shops,restaurants and taxis and so on need to maintain the highest possible levels of accessibility and safety,”she stresses.“In our experience,the small num-ber of devices that dont conform to

168、 good quality standards quickly fall out of use.Blind and partially sighted people may need extra support in making payments when theyre out and about,particularly now that theyre returning to pre-Covid spending habits.Its vital for the industry to meet their needs.”Even when payment terminals do ha

169、ve accessibility features,ignorance on the ven-dors part can negate them,Clarke notes.“When you use your earphone at a talk-ing ATM,you know that youre making a MVirginia Matthews Given the astonishing proliferation of new mobile channels,it can no longer be assumed that people with limited sight ca

170、n make electronic transactions as safely and easily as everyone elseUK POPULATION WITH SIGHT ISSUESNumbers of people living with the following eye health problemsI N C L U S I O NSpecsavers,Deloitte,2021UK Finance,20210.5%of total payments in the UK are made using cheque2.95 million1.39 million1.33

171、millionEarly stages of age-related macular degenerationOcular hypertensionDiabetic retinopathy713,000708,000340,000A cataractGlaucomaRegistered as blind or partially sightedPFleming via iStockSolStock via iStockF U T U R E O F PAY M E N T S06The G20 hopes that,by 2027:The average cost of sending a r

172、etail payment globally will be no more than 1%,with no payment corridor charging more than 3%.Three-quarters of wholesale,retail and remittance payments globally will be credited within one hour of payment,with the rest of the market within one business day.More than 90%of individuals globally(inclu

173、ding those without bank accounts)who wish to send or receive remittance payments will have access to a means of doing so electronically.All payment providers will provide a minimum level of information to customers,including the total cost of a transaction,the expected time to deliver funds,the trac

174、king of payment status and the terms of service.Key aims of the G20 Roadmap for Enhancing Cross-Border Payments has broken the law by selling unregistered securities.Ripple strenuously denies this and intends to defend itself in court.Many experts believe that the recent in-novations in internationa

175、l payments bode well for the future.They are spurring tradi-tional institutions either to be more crea-tive themselves or to partner with the new crop of fintech firms.Despite such advances,most agree that concerted regulatory action is also needed to address the wider issues blighting the market,wh

176、ich is why the G20 stepped in.In 2020,it published its Roadmap for En-hancing Cross-Border Payments.This ac-tion plan is being overseen by two international bodies with the task of in-creasing cooperation:the Financial Stabil-ity Board and the Committee on Payments and Market Infrastructures(part of

177、 the Bank of International Settlements).The plan,which has the backing of central banks,aims to boost public and private sec-tor cooperation on international payments;improve regulatory coordination across bor-ders;enhance existing payment infrastruc-ture;improve data-sharing and explore the potenti

178、al role of new payment technologies and arrangements.It also sets out a series of ambitious goals to cut fees,reduce delays and increase transparency by 2027.Progress is being made in these areas.For instance,the central banks of Australia and India are working to give non-bank service providers acc

179、ess to their domestic payment systems.This means that such providers will be able to deliver their services without having to use a costly intermediary.Only 30%of domestic payment systems allow such access,according to the Bank of Inter-national Settlements.Meanwhile,the US Federal Reserve has exten

180、ded the operating hours of its Fedwire service(a real-time gross settlement system used by Fed banks)and the European Central Bank is set to extend its operating hours in November.This reflects the need to widen the rather limited time window in which banks worldwide are open at the same time.Noneth

181、eless,the G20 plan will take a huge amount of cooperation among govern-ments,central banks,financial institutions and fintech firms if its to deliver all the desired benefits.“The success of our work will depend on the commitment of public authorities and the private sector working together,”says th

182、e Financial Stability Boards secre-tary-general,Dietrich Domanski.“It also will require investment in systems,pro-cesses and technologies to make material improvements in underlying systems and the US are much more efficient than oth-ers,as these tend to be the most widely used.“Where things get tou

183、gher is when youre moving money to a country where the bank-ing system is less developed,”he says.Although theres clearly much room for improvement,there has been some pro-gress in recent years.Most large banks rely on a cross-border messaging system known as the Society for Worldwide Interbank Fi-n

184、ancial Telecommunications(Swift)to make payments.Since 2017,that organisa-tion has been implementing an initiative called the Swift Global Payments Innova-tion(GPI)to improve the speed and trans-parency of international transactions.According to the Bank of England,nearly half of Swift GPI payments

185、are credited to end beneficiaries within 30 minutes and al-most all within 24 hours.Clients can also pinpoint where a payment is in the process,instead of having to wait in blind faith for it to arrive.By last year,about three-quarters of Swifts 11,000 member institutions were using the service.Mean

186、while,some innovative new players have been finding ways to improve trans-fers,with a few eliminating the need for cor-respondent banks altogether.Apps such as WorldRemit or Remitly enable consumers to shift small sums across borders directly to debit cards or digital wallets with ease.Wise one of E

187、uropes largest fintech play-ers,with a valuation exceeding 5bn has built its own banking network across the world,meaning that its commercial and consumer clients dont need to use interme-diaries.Its goal is to make transfers both faster and cheaper.Wises senior corporate affairs and policy manager,

188、Magali Van Bulck,explains:“If youre sending pounds to euros,you pay sterling into our UK bank account and we pay out to your recipient from our euro ac-count.As much as possible,money does not cross borders.We charge a single upfront fee,while the exchange rate you get is the one you see on Google,w

189、ith no hidden charges.”Some payments firms are using so-called use aggregator models,grouping payments to reduce costs,as most cross-border fees are incurred as a fixed sum per transaction.Others are dabbling with blockchains.Pro-ponents say that these decentralised digi-tal ledgers could make payme

190、nts more secure and easier to track than would be possible with the centralised ledgers used by big banks.One provider thats been using block-chains is Ripple.The San Francisco firm,which names Bank of America and Santand-er among its 30,000 clients,claims that cross-border payments on its platform

191、can be made in seconds.Webber believes that blockchains could help with one of the biggest problems af-fecting international payments:the fact that banks in many countries dont operate 24 hours a day(unlike blockchains),mean-ing that payments may take longer to reconcile and get passed on.They could

192、 also address the costly problem of having to pre-fund multiple accounts as collateral to make an international payment,he adds.That said,it is still early days for block-chain a technology that is not trusted in some quarters.For instance,the US Securi-ties and Exchange Commission is suing Ripple o

193、ver its issuance of XRP a crypto-currency it uses to make cross-border trans-actions.The regulator claims that the firm Cross-border payments:fixing the plumbing of a$250tn marketthriving industry has emerged over the past five years with the goal of making payments more seamless.Most of its success

194、es have oc-curred in domestic markets such as the UK and the US,where neobanks,mobile pay-ment apps and buy-now-pay-later services have proliferated.The cross-border payments market is much larger the Bank of England expects it to be worth more than$250tn(217tn)by 2027 but it remains far less effici

195、ent,main-ly because of the disjointed nature of the global financial system.As Sir Jon Cunliffe,deputy governor at the Bank,explained in the FT in 2020,it can take as long as 10 days to transfer money to some jurisdictions.He noted that the fee for each transfer could be up to 10%of the sum being mo

196、ved,while payments from the UK to certain territories might have to go through four currencies and five banks.“Cross-border payment systems still use message formats developed 100 years ago for the telex machine,”Cunliffe added.“For decades,they have been the forgotten cor-ner of the global financia

197、l plumbing.”This has caused immense socioeconomic harm around the world.If businesses cant move money across borders easily,it im-pedes global trade and development,espe-cially in emerging economies.Millions of people face high costs when sending money to relatives and friends abroad,while the unban

198、ked and those living in the most un-stable and impoverished territories often cannot access payment services at all.Its widely acknowledged that the system urgently needs improving.The good news is that modernisation work is under way.New players in the payments sector are trying to smooth cross-bor

199、der cash flows,eliminate unexplained fees and make processes more transparent.The big incumbents that have hitherto dominated this market are taking note and upping their games.Perhaps most crucially,the G20 group of leading economies has agreed an ambitious Ageing technology,legislative disharmony

200、and opaque processes are among the problems impeding the cross-border payments sector.Providers must work with regulators and governments to stand any chance of solving themaction plan(see panel,below)to tackle the compliance hurdles and the lack of coordi-nation between the industry and its regula-

201、tors that have made it so hard to solve the problem.The big question is whether this will make a real difference by 2027,as its architects hope.If you want to move money across bor-ders,there are several ways to do it,depend-ing on the use case.These can include traditional banks;money-transfer serv

202、ices such as Western Union and PayPal;newer fintech players such as WorldRemit and Wise;and payments specialists and forex brokers including Corpay and Monex.While there are many players serving a range of customers with differing needs in this fragmented market,most payments at the back end require

203、 an account-to-account transaction through a bank.This is where a large part of the problem lies.If the pay-ment provider has a direct tie with a finan-cial institution in the receiving country,the transaction can proceed relatively quickly with little fuss.If theres no such relation-ship,it will re

204、ly on intermediaries,with the funds travelling through a network of so-called correspondent banks.This slows things down,with each party applying its own compliance controls and fees.Daniel Webber is the founder and CEO of FXC Intelligence,a provider of data on the payments market.He observes that t

205、here are“200 countries that can send money to each other.When you add it up,that makes about 40,000 individual pay-ment corridors,each one of which is a unique case.Nearly every country has its own rules covering things such as mon-ey-laundering and the financing of terror-ism that financial institu

206、tions must comply with.Then you have all the different use cases for payments,challenges specific to certain industries and the fact that finan-cial institutions may have different operat-ing hours across different time zones and/or use outdated tech.All of these factors create friction.”The clearin

207、g and settlement time for most global payments is typically at least two days,according to research by the Aite-Novarica Group.Many users complain about the lack of transparency concerning where a payment is until it has settled and also about the loss of data during the pro-cess.Moreover,transactio

208、n values may vary by the time they settle,owing to hid-den charges incurred along the way.Webber points out that some payment corridors for instance,between the UK and Daniel ThomasI N T E R N AT I O N A L PAY M E N T SAarrangements,as well as the development of new systems.”Erika Bauman,director of

209、 commercial banking and payments practice at Aite-Novarica Group,doubts that it will accom-plish all its aims on schedule.“The goals of the roadmap may be meeta-ble,but is that likely?As with any industry standardisation attempts,there will be bas-tardisation and differences among global regions tha

210、t make the process arduous,”she says.“Global cooperation is no easy task.If we look at ISO 20022 standardisation in payment messaging as an example,its ob-vious that progress is quite slow.”Webber likes the G20s wide-ranging ap-proach but agrees that meaningful change will take time.“Well see steady

211、 progress with slightly uneven results.Some markets will progress faster than others,”he predicts.Whether the 2027 goals can be met re-mains to be seen.Either way,the status quo presents a huge opportunity for the payments industry.Webber,whose company tracks industry developments,reports that the m

212、arket is growing quickly but also starting to consoli-date.It is always likely to be quite fragment-ed,with many solutions required to tackle the sectors many challenges,he says,add-ing:“There will be no silver bullet.”Baumann observes that payment provid-ers are innovating faster than ever and any

213、bank that fails to adapt could be left behind.“For smaller financial institutions espe-cially,it can be hard to rationalise investing in services that arent used as widely as something such as online banking,”she says.“But the reality is that many custom-ers are leaving to utilise banks that have in

214、-vested in better solutions,including cross-border payment systems.”Global cooperation is no easy task.If we look at ISO 20022 standardisation in payment messaging as an example,its obvious that progress is quite slow Bank of England,2021 The success of our work to improve cross-border payments will

215、 depend on the commitment of public authorities and the private sector working togetherCROSS-BORDER PAYMENTS ARE OF GROWING ECONOMIC IMPORTANCEValue in$tn15025020172027R A C O N T E U R.N E T07Commercial featureith global pandemics,interna-tional conflicts,and a looming economic crisis to contend wi

216、th,agility is critical to business survival today.Against this background,payments systems can play an essential role in enabling enter-prise-level and international businesses among others,to drive sales,improve mar-gins and engage with consumers whose expectations for fast,easy and secure transact

217、ions are greater than ever.“Businesses are gradually moving away from large,enterprise-built systems in favour of small,specialist providers that fit together seamlessly in the back-end,”says Colin Neil,managing director of Adyen UK,the global financial technology platform that provides companies ar

218、ound the world with end-to-end payments capabilities,data-driven insights and financial products in a single solution.“This makes it much easier to pivot since these components can be switched out without bringing the whole system to its knees.”To achieve this,the payments function-ality needs to pl

219、ug seamlessly into a busi-nesss wider tech ecosystem without adding complexity.A single platform solution that can handle all payment needs across all regions and channels is an advantage.This enables unified commerce,another impor-tant and growing trend in which all systems are connected behind the

220、 scenes to not Exploring the new opportunities and greater potential in paymentsAs the technology develops,payments solutions can now offer businesses so much more than simple transactionsonly streamline business operations but deliver better experiences to the end user.According to recent research

221、published by Adyen,47%of businesses say unified commerce improves customer experi-ence.However,only 21%of UK businesses currently connect their payments to other parts of their operations.“The opportunities for businesses to develop competitive advantage are huge,”says Neil.“And unified commerce pav

222、es the way for other innovations such as pay-ment-linked loyalty.The days of wallets bulging with loyalty cards are over.Today,your customers credit card can become their loyalty card as well.It can be used to identify the customer,track purchases across any channel or region and trig-ger rewards.Th

223、is is much easier to manage and a better experience for the customer;something welcomed by 70%of consumers who said that brands need to make their loyalty schemes easier.”Neil adds:“Payment data is also a valuable source of information.It can help businesses to understand the profile of customers in

224、 specific areas.For example,a high rate of Alipay transactions in a specific store might indicate a prevalence of Chinese shoppers in that area.This kind of intel can be used to inform marketing decisions.”At a more advanced level,payment data can be used to drive efficiencies in the back end to rem

225、ove friction.It can,for instance,be used to optimise card payments for higher approval rates.It can also be used to beat fraud since payments systems can now recognise known fraudsters across a range of data points and block them before they can act.According to Adyen,the more data that the business

226、 puts in,the more value it gets out.Meeting customer demand for fast paymentsAs consumers demand a more rapid,seam-less experience,fast payments are becom-ing increasingly important.According to Adyens recent consumer research,67%of UK consumers wont return to a brand if theyve had a bad experience

227、either in store or online and 76%expect businesses to maintain the same flexibility that they demonstrated during the pandemic.“As competition for share of consum-ers shrinking wallets ramps up,its critical that businesses remove friction from every part of their consumer journey,”says Neil.“The pay

228、ment experience is the moment of truth in any purchase and its no time to scrimp on customer experience,especially when the likes of Uber and AmazonGo are setting such a high bar.”Similarly,with the rise of Apple Pay and Google Pay among others,consumers shopping on their mobiles dont need to enter

229、their card details for every purchase.This is thanks to the growth of express payments where the necessary details are already completed.The technology behind this is tokenisation,in which sensitive card data is replaced with a secure token which is useless to any criminal if intercepted.Businesses

230、can offer express payments without worrying about the safety of their customers card data.Neil urges businesses to embrace next generation Strong Customer Authentication(SCA),the mandates for which came into play in March this year.However,the recent Adyen survey data shows that 44%of UK businesses

231、are still not ready for it.“This not only makes businesses vulnerable,since they lose the benefit of a liability shift,it also dam-ages their conversion as more and more issu-ing banks are declining non-compliant trans-actions,”he says.Thanks to easier authentication flows which use biometrics rathe

232、r than relying on a hard-to-remember password every time,these latest SCA mandates should be seen as means of reducing friction for customers.Rise of the conscientious consumerBusinesses also need to recognise the rise of the conscientious consumer,accord-ing to Adyen survey results which show that

233、26%of consumers want the ability to donate to charity while theyre paying.“Thats why we introduced our Giving feature,”says Neil.“Its easier than ever for businesses to enable donations at checkout.In Adyens case,100%of the donation goes directly to the charity and we absorb the processing costs.”An

234、other interesting innovation in pay-ments that Adyen is helping to drive is embedded finance.For consumers this comes in the form of buy now,pay later methods such as Klarna and ClearPay.“From a business perspective,embed-ded finance can be found within your com-merce platform,”says Neil.“Platforms

235、are increasingly looking for ways to remove operational burdens and cash flow restric-tions from their users.Thats why we can expect to see the growing use of issued vir-tual and physical cards in order to stream-line money flows and speed up payouts.”Pre-approved capital loans based on business use

236、rs previous performance on the platform will also help to keep the wheels of commerce moving during diffi-cult times by quickly unlocking capital for businesses when they really need it.Adyen recently announced that it is expanding its services beyond payments into embedded finance products for its

237、platform customers.Neil says:“Payments must play their part in ensuring the customer comes away happy.Nows the time for you as a thriving business to invest in the technology that will ensure that buying from you is as easy as it can be.”As the cost-of-living crisis ratchets up,busi-nesses must thin

238、k carefully about the expe-riences theyre offering and ask whether theyre providing real value in exchange for peoples hard-earned cash.How payments can build customer loyaltyThe challenge in developing payments sys-tems that deliver greater customer loyalty is real.Over a quarter(26%)of consumers s

239、topped using or buying from a business in the past year,a figure that rises to 32%among Gen Z,according to PwCs Customer Loyalty Survey 2022.On the other hand,the survey also revealed that more than half(51%)of respondents said that theyre less likely to be loyal to a brand if its online shopping ex

240、perience isnt as easy or enjoy-able as shopping in person.Connected payments enable brands to build a complete picture of their cus-tomers and create cross-channel loyalty and rewards programmes.Adyens recent research found that 61%of consumers would download a retailers app to receive better loyalt

241、y rewards.And 63%want brands to connect their loyalty to their payment method.Adyen customer Joe&The Juice knows first-hand the power of connected pay-ments.“By linking our app to the credit card terminal,customers get greater transparency of their purchases,mes-sages,and rewards in the app,”says th

242、e companys VP of strategy&business development,Thomas Evald.“On the other hand,we gain a clearer under-standing of who our customers are and how we can provide them with better ser-vice and products.”Payments technology is also helping the brand by enabling it to connect its online and in-store chan

243、nels in one system.By centralising its payments,Joe&The Juice can provide a consistent experience across both channels;a key factor for engaging customers,improving personalisation and building loyalty.“Were unifying the ecommerce and physical store experiences,”says Evald.“You can preorder from you

244、r home,or you can order in store.You can pay via the ter-minal or in-app.It doesnt matter.Weve created this flexibility by connecting our payment data in the back end.It lets us connect the best of both worlds to deliver an even better service.It also lets us see the whole picture in one place and e

245、valuate our performance.Thats amazing for us.”For more,please visit As competition for share of consumers shrinking wallets ramps up,its critical that businesses remove friction from every part of their consumer journeyWEmbedded finance providing tailored financial experiences Increasingly,platforms

246、 are looking to create their own payments and financial experiences in order to meet demand from underserved SMBs thereby growing loyalty and unlocking new revenue streams.To meet this demand Adyen has been building out its capabilities in all major markets.“Our goal is to remove the limitations of

247、legacy financial systems and deliver the power of a bank combined with the adaptability of fintech,”says Thom Ruiter,VP of banking and financial products at Adyen.“We want platform customers to enjoy unparalleled flexibility so that they can meet the evolving needs of their users without the barrier

248、s of regulatory complexity,lengthy product development or sponsor bank restrictions.”The process started with Adyen for Platforms,a product that allows platforms to embed payments into their services and to deliver a unified commerce experience across sales channels and geographies.“Over time,it bec

249、ame clear to us that platforms needed more control over the payout experience and so we launched Issuing,”says Ruiter.“This has enabled platforms to offer their users virtual and physical cards for business transactions and to directly receive funds faster.”Going forward,Adyen will include Issuing i

250、n a full suite of embedded financial products.These include Adyen Accounts,which allow platforms to build out different types of accounts to solve their users treasury needs such as receive payments,initiate pay outs,and safely store funds,all in one place.Another new product,Adyen Capital,allows pl

251、atforms to extend business financing to their users directly from their interface.Funding offers are based on historic payments data allowing platforms to proactively offer business financing to users who qualify,and automate repayments based on incoming revenue Adyen clients like the fact that its

252、data-driven risk-scoring capabilities means that users dont have to go through lengthy and complicated application processes and can have fast access to capital right at the point of need.Platforms will be able to solidify their relationships with their users,while providing the traditionally underb

253、anked segment of small businesses with the funds they need,which is especially important during the current economic climate,when cash-flow is an ever-growing challenge.Adyen,2021-2022want brands to connect their loyalty to their payment methodof consumers would download a retailers app to receive b

254、etter loyalty rewards63%61%ADDRESSING CHANGING CUSTOMER NEED THROUGH PAYMENT INNOVATIONAdyen,2021-202247%of businesses say unified commerce improves customer experience21%of UK businesses currently connect their payments to other parts of their operations67%of UK consumers wont return to a brand if

255、theyve had a bad experience in store or online 76%expect businesses to maintain the same flexibility demonstrated during the pandemicF U T U R E O F PAY M E N T S08But not everyone is convinced that SCA is the right way to do this.Denmarks finan-cial affairs minister,Simon Kollerup,says that,while S

256、CA has led to a significant de-crease in fraud cases,it can cause incon-venience for users and may create“a lack of financial inclusion for vulnerable and non-tech savvy citizens”.The European Security Transport Asso-ciation(Esta)represents companies in the European cash management industry.It also

257、expressed concerns over fi-nancial inclusion in its response to the consultation,calling on the commission to ensure that cash payments are included in any new directive(they are ex-cluded from PSD2).“Consumers must have a right to pay in cash,”and“retailers must have an obli-gation to accept paymen

258、ts in cash,”Esta said.It added that the“war on cash”had advanced by seven years dur-ing the pandemic,largely be-cause authorities had been making unsubstantiated claims about the risk of contamination through cash transactions.There are concerns about the PSD2 ban on surcharges for payments by credi

259、t card.Germanys Federal Cartel Office ar-gues that,while the interchange fees that banks charge merchants for using cards have fallen,the payment scheme fees charged by the likes of Visa and Mastercard have increased and passed on to consum-ers.It says that consumers using relatively inexpensive pay

260、ment methods are“cross-fi-nancing the more expensive methods”.The travel sector in particular has faced problems operating under PSD2.It has been hard for operators to handle bookings for services such as hotel accommodation where the traveller doesnt show up and has no incentive to provide further

261、authentica-tion to cover the cost of the booking.There has also been confusion re-garding bookings made on compa-ny credit cards and so-called lodged cards,where companies require employees to use a sin-gle company card number that has been lodged with their travel agent when booking business trips.

262、Such transactions are exempt from SCA but there is no ban on card surcharges,unlike for consumer transactions.But for companies requir-ing employees to use their own cards,these exemptions do not apply.In these cases,there are difficulties handling bookings for services such as hotels and car rental

263、 where payment is only made when the travel happens rather than at booking.Some airlines have also been using incor-rect assumptions for instance,that pay-ments made using American Express cards are exempt from PSD2 because Amex is based outside the EU.EU runs the rule over its regulatory revolution

264、The second payment services directive,which took effect in 2018,was designed to open up banking,cut fees on card transactions and reduce fraud.How well has it worked?t is more than four years since pay-ments in Europe underwent a rev-olution.In 2018,the regulations of Europes Payment Services Direct

265、ive 2(PSD2)came into force across the EU,then including the UK.PSD2 ushered in an era of open banking,giving consumers more control over how they managed their payments and bank ac-counts,and opening competition to new players in the banking and finance sector.It forced banks to allow competitors ac

266、cess to their customer data,making it easier for consumers to switch to a bank offering them a better deal.The regulations also introduced new se-curity measures intended to make online payments safer.These included two-factor strong customer authentication(SCA)for certain electronic payment transac

267、tions and for accessing accounts online.It re-quired consumers to identify themselves in two different ways when making a pay-ment,such as typing a password,entering a code on a smartphone or confirming a pay-ment using a fingerprint.PSD2 also introduced a ban on shops and online retailers from addi

268、ng surcharges for payments made with credit and debit cards.So has the new regime worked?To find out,the European Commission began a se-ries of consultations this summer to review the effectiveness of the PSD2 regulations.If further changes or clarifications are re-quired,this might lead to a third

269、directive at some point.Mairead McGuinness,the financial ser-vices commissioner,declared the 12-week review open in mid-May.She said that,since the enactment of PSD2,“a wide array of new players in particular,technical ser-vice providers have become key actors in the payments ecosystem.And they are

270、not all effectively supervised.With the increase of digitalisation and ecommerce,social en-gineering and scams pose a growing threat to payment security and consumer confi-dence.As new types of fraud emerge,we must be ready to improve both detection and prevention measures.”Hundreds of stakeholders

271、including trade associations,businesses(not only in the payments sector)and individuals have responded to the consultations.One of them,the European Banking Au-thority(EBA),believes that the benefits of PSD2 are starting to materialise.“The security requirements in particu-lar,SCA are having the des

272、ired effect of re-ducing fraud,”it wrote in its submission.The EBA has found that the share of fraud by value is three times higher for payments authenticated without SCA compared with payments authenticated with SCA.Travel technology organisation EU Trav-el Tech has called on the commission to prov

273、ide further clarification of surcharge rules so that they are applied more consist-ently and fairly across member states.Digital Europe,a trade association for digital industries,wants certain exemp-tions from PSD2 most notably,charging terminals for electric vehicles,to hasten the move away from pe

274、trol and diesel.The open banking revolution promised by PSD2 has partly come to fruition.Compe-tition has increased in the payments sector,with more than 2,700 new payment institu-tions and electronic money institutions reg-istered since the directive took effect.The European Banking Federation(EBF)

275、believes that overall,PSD2 has contributed to increasing levels of innovation,competi-tion and security and that concepts such as SCA have been“positive developments”.But in its response,the EBF said it might be too early to comprehensively gauge the impact of PSD2.Further change should keep“regulat

276、ory consistency as a core prin-ciple”,it said.The EBF also believes that a review of PSD should look beyond open banking into open finance,which would ex-tend regulation to cover pensions,insur-ance and investments.McGuinness sees this as a potential route for new regulation.When she announced the r

277、eview,she said:“Open finance has the potential to spark new,innovative products personalised to individual consumers while those consumers keep control over their data.”The payments sector has also moved fast.One of the big questions is whether Europe will bring in new regulations for innovative pay

278、ment types,such as crypto transac-tions,digital wallet services and buy-now-pay-later(BNPL).The combined value of BNPL transactions worldwide jumped from 29bn in 2019 to 103bn in 2021.But the number of consumer complaints about BNPL in the UK has risen sharply.Further innovation in the payments spac

279、e seems inevitable.Europes regulators will have to move sharply to ensure that theres a level playing field for newcomers and legacy businesses,while protecting the consumers who use them.IMark FraryR E G U L AT I O NRANGE OF PARTIES RESPONDING TO EUROPEAN PAYMENTS CONSULTATIONPercentage of responde

280、nt categoryEuropean Commission,2022(Figures do not add up to 100 due to rounding.)52%EU citizen 20%Company/business organisation 11%Business association 5%Public authority 4%Other 3%Non-EU citizen 2%Trade union 2%Consumer organisation 1%NGO 1%Academic/research institutionartJazz via iStock A wide ar

281、ray of new players,in particular technical service providers,have become key actors in the payments ecosystem.And they are not all effectively supervisedCommercial featureHow AI is tackling payments fraudJared Kernodle,chief revenue offi cer at Kount,and Adam Sharpe,chief executive of Cardstream,exp

282、lain how technology is leading the fi ghtback against fraudstersHow has the payments system evolved since the start of the pandemic?The pandemic accelerated the growth of online payments.We have seen a profusion of businesses setting up their fi rst ever ecommerce or dig-ital operations.The issue is

283、 that mer-chants are in the dark about these new online customers.They dont know who the person is behind the computer,and they dont know what their intent is.If someone buys 10 iPads in one go,are they a business,an individual with a lot of tech-obsessed kids or a fraudster?If they came into your s

284、tore regularly,you would talk to them and develop a relationship.So,without that,we need to develop actionable digital relationships instead.Customers who previously went into a store have now adapted to sit-ting at home using their smartphones to buy goods and services with credit cards,crypto or b

285、uy now pay later services.This growth has meant more digital and con-tactless payments,as well as QR codes and PayLinks.We are also seeing more touch-less payments,in particular restaurants and leisure facilities ditching chip and pin machines and moving to mobile technolo-gies such as apps.What are

286、 the main challenges resulting from this growth?It has put a signifi cantly greater onus on ensuring secure digital payments.As transaction numbers have increased,so has the amount of fraud,with people using stolen cards,details they have secured from the black market or taking over loyalty accounts

287、 and banking the reward points.Were also seeing more chargeback fraud,misleadingly known as“friendly fraud”.At the end of the month,if you look at your credit card bill and see a payment that you dont recognise,you query the transaction and ask for a chargeback.It could be that youve forgotten but p

288、eople also use this to make fraudulent refund claims.Merchants are also increasingly under pressure to produce frictionless cus-tomer payment journeys to compete against the likes of Amazon.We have all been frus-trated putting in card details and then seeing the payment screen whirring,only to be me

289、t with a decline message.Neither gen-uine customers nor honest merchants want these“false negatives”querying and even condemning their identity.How is artifi cial intelligence(AI)technology helping to prevent fraud and develop digital identities?Using our technology,we harvest con-sensual customer d

290、ata.Anywhere that customers digitally interact with a business,through a mobile app or website,feeds our machine learning and behavioural analyt-ics technology to profi le their digital iden-tity.We combine our data with that of our parent company,Equifax,to perform a real-time analysis as to whethe

291、r the customer trying to make an online transaction is a good actor.We also do real-time post-au-thorisation checks to counter chargeback fraud.These frictionless processes are equally effective online;cardholder pres-ent;crypto-based;cross-jurisdictional;or local paymentvariants.Our AI fraud mitiga

292、tion is a unique transac-tion dead end for the 1%of fraudsters who prey on genuine traders,and a major stride forward for honest trade.What benefi ts have you seen from the Kount and Cardstream partnership?Cardstreams Open Payment Network is a unique constellation of diverse merchant service provide

293、rs and ancillary payment methods.Fraud mitigation is a top priority for our channel partners and their merchant clients.Fraudsters will always exist but adding the Kount technology has provided a massive barrier against that threat.AI and machine learning has been pivotal in helping our partners to

294、mitigate fraud end to end without frustrating hold-ups known as checkout friction.Real-time decisions on a transactions probity are being made in milliseconds.Where do you see the payments sector moving in the foreseeable future?There will be more of a blend between payments and digital identity.Mer

295、chants will want to fi nd more ways to help customers pay quickly and with less friction.That will be helped by knowing more about the customer and creating a personalised experience.If I am a keen fl y fi sherman and visit a sports website,I dont want to see pages of products for deep sea fi shing.

296、If I can be directed straight away to products that I need,then I will pay more quickly,and the merchants will do more business.To learn more,visit and JKASJKJKJKASASWorried about PSD3?Watch our latest free thought leadership webinar.You process payments within seconds.The right regulatory intellige

297、nce is how you make decisions just as fast.VIXIO makes mitigating risk and capitalising on new opportunities possible.This is how you scale.R A C O N T E U R.N E T09Ready moneyigital payment is now the way most UK consumers part with their money,even in-store.Only around 20%of people prefer cash and

298、,the Finan-cial Conduct Authority(FCA)says,just 10%rely on cash for daily purchases.That makes it sound as though cash is on the way out.After all,making,distributing and securing cash is expensive and digital payments offer advantages like a data trail and a frictionless checkout.Nonetheless,the go

299、vernment recently announced that the FCA will get powers to require the largest banks and building societies to maintain cash withdrawal and deposit facilities across the country.Legislation is expected to come into force in April 2023.Swedens central bank,the Riksbank,took the step of protecting ca

300、sh in 2021.“There are two principal reasons for maintaining cash,”says Chris Holmes,member of the House of Lords and co-chair of the all-party parliamentary group on fintech.“The first is financial inclusion.Cash still matters and matters materially to millions of people.“The second is financial res

301、ilience.Cash is an extremely robust layer of resilience in the financial system.Its there even when digital networks are not.For that reason,it should be designated as part of our critical national infrastructure.”Holmes was behind the amendment to the Financial Services Bill in 2021,which in-troduc

302、ed the option of cashback at tills without the need for a purchase.“Cash at the till was a really important new development,”says Nick Quin,head of financial inclusion at Link,which runs the UKs ATM network.“Around 30%of those withdrawals are for non-round amounts and the average value is about 25.T

303、hat compares with an average of around 80 at an ATM.Were pretty convinced that its serving people who are budgeting.In February 2020,around 3.8 million people struggled to make ends meet.People who are budgeting are,of course,a growing segment as the cost-of-living crisis bites.“A lot of people find

304、 they control their fi-nances better when they use physical cash,”says Holmes.He says those who are older,those from a lower social-economic group,from more deprived parts of the country,or are disabled are all more likely to use cash.Holmes would take legislation on access to cash a step further.“A

305、n important debate needs to be had about bringing in a univer-sal service obligation for cash,”he says.“For example,when it comes to paying energy bills or shopping at supermarkets.Other-wise,what currency does cash have if there is nowhere to spend it?We need a solution that benefits everyone,from

306、small retailers to large utilities as well as us as consumers.”But ensuring that cash circulates is not cheap.“The cost to the UK of making cash available printing the notes,filling ATMs,delivering cash to shops,the whole ecosys-tem is about 5bn a year,”says Quin.“That obviously becomes more of a bu

307、rden,the smaller the number of people using cash.”The 52,000 free-to-use ATMs are paid for collectively by the banks.Link has a com-mitment to ensure that every street that has five or more shops has access to free cash withdrawals within one kilometre,whether from an ATM or a post office.“The bigge

308、r commitment is that industry drew a line in the sand in 2018 to maintain the geography of the network,”says Quin.“Banks pay extra money to support a pro-tected ATM.If one closes,we go and replace it.”Quin says there are around 3,000 pro-tected ATMs and there is no minimum transaction level.“We pay

309、up to 2.75 per transaction on machines in deprived areas where there are small volumes,”he says.The pandemic revealed the importance of cash in poorer areas.“Across the network,transaction volumes were down 60%,”says Quin.“In the wealthiest areas,the fall was 80%.In the poorest areas,though,cash wit

310、hdrawals were just 20%lower.”The FCA will soon be able to require big banks and building societies to ensure that cash is available across the UK.What does this mean for the future of the pound in the UKs pocket?But even if more people do turn to cash as household budgets get squeezed,isnt there a d

311、anger for cash to become stigmatised and for its use to be concentrated in more deprived areas,where businesses may be less able to manage it?After all,if small firms dont have easy access to a bank,tak-ing cash can quickly become onerous.Quin says part of the solution to that is keeping banking ava

312、ilable.He adds there are already two shared banking hubs and Link recommends setting up a further 10 to serve areas where bank branches have closed.The value of cash taken out of ATMs is now around 25%lower than it was pre-Cov-id.Still,a recent Link survey found that around 10%of people intend to sa

313、ve money by cutting back on using contactless and 9%will use cash more,mainly because it helps them keep an eye on their spending.But even as the near-term reliance on cash rises as people struggle to make ends meet,digital services will continue to evolve and to encroach on cash.How should that be

314、managed over time?“We need a dual track,”says Holmes.“A universal service obligation for cash and a way to drive the future of digital payments.Otherwise poorer areas,more deprived areas,the elderly,could be left behind and we cant allow that to happen.”Many governments are looking into the possibil

315、ities offered by central bank digital currencies(CBDCs).“A CBDC has the potential to be the most powerful means of surveillance and control that a state could have,”says Holmes.“A great feature of cash is that you can do with it what you will,its entirely anonymous and that shouldnt be underestimate

316、d.”Nonetheless,Holmes believes that CBDCs could,“if got right”,be transformational.“But they will go right to the heart of what sort of society we want to be part of,”he says.Quin thinks that CBDCs are still some way off.Until there is a person-centric ap-proach,“or some revolution in how every-one

317、uses online banking”,he says cash will remain central to many peoples lives.CASH WITHDRAWALS HAVE HIT RECORD HIGHS IN RECENT MONTHSPost Office cash tracker data personal and business use(m)Post Office,2022DOuida TaaffeC A S H Cash is an extremely robust layer of resilience in the financial system.It

318、 should be designated as part of our critical national infrastructureAug 21Sep 21Oct 21Nov 21Dec 21Jan 22Feb 22Mar 22Apr 22May 22Jun 22 Betsie Van Der Meer via Getty600700800Commercial featureHow has the digital commerce landscape evolved over the past decade?Weve all seen and participated in the hu

319、ge growth in online connec-tivity in recent years,driven by the near ubiquitous penetration of smartphones,tablets and social media platforms and powered by innovations like cloud com-puting and AI.By connecting us all online in such a seamless way,these technolo-gies have also been great enablers o

320、f dig-ital commerce and sparked a payments revolution,which weve been privileged to play a key part in at Payoneer.When consumers are almost con-stantly interacting online,there are great opportunities within the commerce ecosystem to integrate into those daily workfl ows by leveraging some of the e

321、xciting emerging technologies in the ecommerce space.These developments have triggered a lot of innovation,such as APIs that allow us to easily integrate new direct-to-consumer checkout capabili-ties within a merchants website,linked directly to its virtual Payoneer account.To what extent has digita

322、l commerce helped create a new breed of global SMEs?The opportunity for SMEs to go global fi rst was really unheard of a decade ago,yet in certain regions it is increasingly commonplace.In Spain,as just one example,were seeing compa-nies that were previously local-face-to-face market traders-suddenl

323、y deciding to prioritise global markets as part of a digital go-to-market strategy.Thats pretty extraordinary and its all thanks to digital technologies,which have torn down the barriers that previously pre-vented smaller companies from riding the waves of globalisation.In fact,in todays fast-moving

324、 global business environment,SMEs can have an advantage over larger corporations as they are able to adapt and pivot with far more agility.These forces combined have created a perfect storm for SMEs to compete globally for customers in ways that were just not possible historically.What are the key c

325、hallenges SME merchants face in fulfi lling their global growth potential?Lets say youre an Amazon seller doing a really good job on Amazon UK and want to start listing on Amazon France.Its always been really hard work to open a local bank account in another country.In some jurisdictions you even ne

326、ed to have a local entity to do that,which is simply not feasible for someone working out of their loft or spare room.That was a real catalyst for us when we realised that we could,in essence,set up accounts for people in just hours,all around the world.As a result,weve become a real growth partner

327、to SMEs.A genuine part-nership is a win-win situation.If our customers grow,we grow.We try to help solve their growing pains through a real community approach,as well as educat-ing them on opportunities in different regions or markets.For example,we brought our UK mer-chants together with Walmart.As

328、 we deal with millions of customers that are effectively trying to do the same thing grow globally we are able to help solve their problems not just through our own solutions but through partnerships with companies that solve other problems for them.Whether its payments or tax advice,rather than hav

329、ing to manage multiple relationships our customers can do it all through one platform.What opportunities are there in digital commerce and payments for social impact?The movement of money pre-sents enormous opportunities to support communities and drive social impact.Despite the terrible circum-stan

330、ces there,weve continued our investments into Ukraine in order to sup-port our local customers and our own teams.Through our engagements with local communities in the region,weve learned that the best way we can help with their recovery and rebuilding their economy is by continuing to provide the se

331、rvices and support that allows them to keep working,whether theyre coding software for foreign clients or selling products overseas.That shows that dig-ital commerce,in itself,is an enabler of social impact.Diversity and inclusion is another example where digital commerce cre-ates social value.When

332、youre listing on a marketplace,no one knows who you are,so its a real meritocracy.It is harder in a physical environment to be seen as equals to large corporate brands and have the same opportunities to access customers.But with digital commerce,the people with the best products and the best go-to-m

333、arket approach do the best regardless of their backgrounds.Anyone,anywhere can participate and succeed in todays global digital econ-omy and were committed to supporting that democratisation of opportunity.What is the future of payments in ecommerce and how are you fi nding new ways to support SMEs?Payoneer is evolving the payments space along with our customers,creating a sort of fi nancial opera