Only a generation or two ago, there were no debit cards or cash machines, let alone internet shopping or banking. Even in the relatively recent past, the only way to pay a bill would have been to write a cheque or pay with paper banknotes or coins.
The rapid payments revolution has brought about new technologies which today seem commonplace, such as online banking, smartphones, chip technology on plastic cards and the introduction of contactless. We have even seen the money in our purse and wallets change with polymer banknotes and a shiny new 12 sided pound coin being recently introduced.
Everything about how we make our everyday payments has changed in the last few years, but what is driving all these changes? Are we as customers constantly demanding new innovations or are there other drivers enabling the transformation?
Changing customer preferences and expectations – As customers we value the speed and convenience of online shopping. We expect faster services than ever before – and payments are no exception. We want to make payments securely, quickly and easily at whatever time of day or night we choose.
New technologies – Smartphone technology has given customers access to an ever-expanding range of services through ‘apps’. Apps now enable payments for everything from taxis to hotel bookings, as well as giving the option of quick, secure payments through online banking.
Regulation and legislation – There are numerous regulatory and legislation changes in the UK that will have an impact on the payments industry. Additionally, the UK’s landmark decision to leave the EU may further reshape the UK payments landscape. These regulatory changes will need to be sequenced and implemented effectively in a way that brings the best outcomes for customers and protects the resilience and security of the payment systems.
New entrants in the market – It is estimated that that there are now over 2,500 payment service providers in the UK, many of whom are now offering new payment products and services. The UK is the hub of the FinTech community and their growing influence on the financial services landscape will continue to have an impact on innovation and change.
Competitive and collaborative developments – Industry-driven collaborative changes, such as faster payments, Paym and the induction of contactless cards, are changing our payment habits. Many of these innovations have been brought about by payment service providers competing with each other to provide new products and services for their customers. More competition drives greater choice for consumers.
Enhancements to our traditional payment mechanisms – We are seeing changes to the ways some of our more traditional payment methods are provided. For example, the use of cheque imaging will not only speed up the time taken to clear cheques but also offer new ways for customers to pay cheques into their accounts.
Taking a step back and reflecting on what is driving all these changes in the payments landscape, it is clear is that this trend is set to continue.
For those new to working in the payments industry there are interesting times ahead. The change is challenging, but with challenges come opportunities. Taking steps to equip yourself with the best skills possible can only help. The new CertPAY qualification is designed to enhance the skills and understanding of anyone working in the sector. Innovation starts with people, and knowledge gained through professional education can help contribute to the success of a business.
Anita Heaviside is the Head of Member Services, Payments UK.