‘A strategic framework for payments innovation and change over the next decade’
by Jonathan Williams, Director of Communications and Product Strategy, Experian Payments
The National Payments Plan (NPP) was published earlier this year by the UK Payments Council. The document has been promoted as the first step towards agreeing the future development of the UK payment industry. Indeed, the Plan is a welcome movement towards more efficient and dynamic payment services in the UK. However, at a time when corporates are facing pressure to comply with many pan-European harmonisation initiatives such as the Single Euro Payments Area (SEPA) and the Payment Services Directive (PSD), it is not immediately clear to treasurers how the UK-centric NPP will work with other impending regulations and shape tomorrow’s European payment landscape.
There are still many areas of the NPP which are yet to be agreed and the UK Payments Council has called for an extended period of consultation on several elements in the Plan. Specifically, there is a great deal of work still to be done to address the shifts in the wider European payment landscape and how these will impact the UK market, which is of particular relevance to treasurers and those responsible for compliance and risk management. At present there are few connections between the NPP and the Payment Services Directive. Indeed, the PSD was not correlated with the NPP at its inception, resulting in a lack of clarity in the NPP about the Directive’s influence on the UK market.
Payment types - looking ahead
The demise of the cheque
In recent years, there has been a reluctance to invest in cheque processing efficiency. As a result, cheques have become more costly to process and have risen up the fraud risk scale. Large retailers have already ceased to accept cheques, signalling the long-predicted decline of this payment method and continued migration towards electronic payments. This evolution is advocated by the National Payments Plan. The declining acceptance of the cheque is a positive step for UK businesses due to the expensive in-bound and out-bound processing cost, which can, in some cases, exceed the value of the cheque. Moreover, according to a recent survey by Experian Payments, which questioned the utilities, telecoms and insurance industries, it is also the payment channel that suffers the most fraud. Forty-nine per cent of all fraud suffered by these sectors occurs with cheque payments. To this end, the Plan will help to guide corporates towards migrating their customers onto more efficient and secure payment methods, such as Direct Debit.