The payment industry is ideally placed to help during the cost-of-living crisis
By Anjana Haines, Head of Content, at The Payments Association.
Britain’s citizens and businesses are facing perhaps the most difficult economic conditions in living memory. Ordinary people are looking at the possibility of being over £7,000 worse off than they would be if energy costs weren’t spiralling out of control and businesses could receive energy bills hundreds of thousands of pounds above what they have budgeted for.
It’s going to be a grim time unless something is done rapidly, and one of the few rays of hope is that the payments industry can be part of the solution.
Pressured times calls for more inclusion
We have already faced lean economic conditions during the recent lockdowns, and many parts of the payments industry were able to both help people adjust to an increasingly digitalised retail space and continue to profit. It will be much more difficult to find a silver lining to the forthcoming crisis: if people are spending a quarter of their wages to keep their lights on then they won’t be spending that money, online or off. If businesses close because their energy bills have gone from £10,000 to over £30,000 then they take their contracts with payment service providers and cybersecurity companies with them. The payments industry relies on payments being made, and if they are not then we could be in trouble.
As with any crisis, it’s prudent to hope for the best but prepare for the worst. In a worst-case scenario, millions of people are going to disappear from the economy – they simply won’t have enough to spend. As an industry we’ve been focused on financial inclusion for many years, and our expertise in bringing people into the financial mainstream will be vital to stop a large part of the population from falling between the cracks.
Similarly, the wider fintech industry has developed tools that give people unprecedented control and insight over their finances, allowing them to see where their money is being spent and budget accordingly. This is sure to become even more popular when households are feeling the pinch.
For businesses, being able to make every penny count is going to be vital. Companies that can offer lower fees and better card acceptance rates are going to allow businesses to build up incremental savings that, we hope, will be able to keep many afloat. The same goes for a new generation of lenders who can leverage technology like big data and open banking to give more businesses the ability to borrow enough to see themselves through difficult times.
A rise in digital crime?
We can also expect a potential rise in digital crime, one of the sectors that we have done a lot of work to understand. Just as during the lockdown period, people stuck inside with little money are going to turn to increasingly simple methods for committing fraud, which could range from simple chargebacks to learning more sophisticated techniques. Anti-fraud companies will be on the frontline like never before, and payments companies need to ensure that their security systems are able to withstand a sudden rush of fraud attempts.
Working together as an industry
Lastly, we’re going to need to work together. That’s something The Payments Association was founded to do, and it is going to be a key strategy going forward. We need to be sharing information, developing new technologies together and working collaboratively to give everyone the ability to stay afloat during this difficult time. The future of our businesses depends on there being a healthy economy in which people are making transactions, and it’s our job now to keep payments flowing in a way that works for everyone.