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The Payments Association presented the launch of its latest report ‘Navigating the rising cost of living: Payments innovation as a game-changer’ in Parliament last week (14 September 2023) to a range of representatives from the House of Commons, House of Lords, and industry bodies including HMT, the FCA, BoE and the PSR.
The report was commissioned as part of The Payments Association’s Project Inclusion working group and provides recommendations on how the government can better harness the payments industry to deliver more tailored payments products and solutions at a time when consumers’ belts are tight amidst the rising cost of living.
It explores the intersection within a set of complex issues: the cost of living crisis, the poverty premium, the untapped potential of fintech, and urgent changes needed within the welfare system.
The launch event was hosted by Lord McNicol of West Kilbride and chaired by Pooja Bhachu, director, public policy at Mastercard and project lead for Project Inclusion. Bhachu mediated an in-depth discussion on surrounding the application of universal credit and making cross-border payments more inclusive.
As inflation continues to stand at levels not seen for 40 years, Project Inclusion is dedicated to exploring new ways of helping the financial health of millions affected by the cost-of-living crisis gripping the nation’s wallets.
The UK’s fintech industry contributed over £44 billion to the economy last year, marking a 20% increase year-on-year, according to data from Innovate Finance.
Project Inclusion believes the government can look to the sector more to democratise access to financial services, reduce the poverty premium, and empower individuals to better manage their finances.
One of the main topics discussed at the launch event and within the report is the importance of sharing government data with the payments industry to further innovation.
The group emphasised the need to leverage smart data to enable data-driven innovation that supports vulnerable consumers to achieve better financial stability.
While concerns were shared regarding the growing issue with fraud, a suggestion was put forward on the possibility of using digital verification methods to help combat the problem, which is becoming more prevalent in the financial sector.
Beyond this, many agreed on the importance of initiatives in the open banking space led by the Joint Regulatory Oversight Committee (JROC) by ensuring that barriers between policy makers and industry bodies on the issue of data sharing are broken down.
MPs were given evidence on how a more open data-sharing ecosystem can benefit all those in the sector, particularly consumers.
Members of Project Inclusion also highlighted that there needs to be a focus on making sure that consumers who regularly send payments abroad to friends and families should have access to fair and affordable rates, something that can be achieved by pointing consumers to digital and tailored currency transfer products.
Bhachu says: “Project Inclusion’s lobbying of the UK government with insights from the payments industry remains vital, particularly regarding payments innovation which is currently aiding those most affected by the cost-of-living increases, as well as highlighting areas where additional cooperation between the industry, policymakers and third sector is essential.
“Our purpose is to bring about collaboration and clarity on innovations, which could reduce financial exclusion and the poverty premium, I feel today we have met these aims and facilitated vigorous discussions on these issues.”
TPA head of policy and government relations, Riccardo Tordera, says: “It was important to bring evidence to the centre of decision making of how more technologically advanced payments solutions can effectively impact those who are most affected by the burden of the increasing cost of living.
“We hope that the recommendations made in the report will be taken into account when approaching policy direction and regulatory development that will shape the future of payments.”