![]() What about resilience? What about competition? What about choice? Might other payment methods be more efficient by costing less across all participants in a payment? Are we missing out on something?Īnd having such a high proportion of consumer payments through card schemes may not be such a good thing. Because no financial information is shared with the online merchant, the Interac Online service is more secure than online credit card payments. The Interac Online service allows customers to pay for goods and services over the Internet using funds directly from their bank accounts. It allows online banking customers to send money to anyone with an e-mail address and a bank account in Canada. Small companies who wished to avoid credit card charges and simplify online payments soon followed suit. Swish was originally intended for transactions between individuals, but soon it started to be used for flea markets and collections at church services, and by sports clubs and other organisations as payment at small events where a credit card reader was perceived to be too expensive or otherwise impractical. The service works through a smartphone application, through which the user's phone number is connected to their bank account, and which makes it possible to transfer money in real time, and confirmation is received by both parties within a few seconds. Cards provide security and some protections when things go wrong.īut the rest of the world does not appear to be quite as card-obsessed as the UK. They are even accepted now at outdoor markets and school fetes, especially with the growth of payment facilitator firms. They can pay for things in the shops and online. Card payments rule OK.Ĭards are so convenient and fast. There are no prizes for predicting that consumer card use will increase relative to cash in 2020. 80% of adults made a contactless transaction in 2019. The strength of cards, relative to other payment methods, is particularly pronounced if you consider consumer payments made to retailers, whether online or offline.Ĭash-use is declining rapidly, consumer usage of cheques has all but disappeared. ![]() Payment cards account for a majority of payments by consumers and consumers account for over 35 billion of the 40 billion payments which were made in the UK during 2019. In 2019, for the first time, card payments represented over half of all payments in the UK. Here I consider what are the incentives to use alternative payment methods to cards? A country of card payments And how one creates those incentives, and makes adoption attractive, is difficult. However, even with the greatest payments infrastructure in the world, innovative alternative payment methods will only be used if the incentives can be created for people to use them. This might occur with technological developments, such as the New Payments Architecture. Increased competition between card payments and instant interbank payments could bring many benefits to those who make and receive payments, as discussed here. By Hugh Mullan, Technical Specialist and Economist, PSR
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