The current global health pandemic is drastically altering the way the world is functioning, having a significant impact on nearly every industry, including payments and finance.
Both the payments and finance sectors have been forced to adapt in order to help combat the crisis and also ensure stability for their stakeholders.
Andrea Dunlop, Chairwomen Emerging Payments and Panel member Payment Systems Regulator emphasised the role the payments sector has played in aiding economic recovery.
She stated: “From my perspective, the payments industry has been a key part of the UK infrastructure, it’s important to keep the economy moving. Whether that comes in the form of online shopping or supermarkets.
“I don’t see COVID having been a massive obstacle for the payments industry; everyone was well set up to work remotely and utilise other methods of communication. On the whole, we are there in a supporting aspect, the only thing is that some of the larger banks and some of the fintechs have been faced with the significant challenge of dealing with an exponential amount of customer information requests.
EPA Ambassador, Neira Jones, complimented her point, stating: “The infrastructure of the payment sector is built to cope with any kind of volume. There are safeguards and regulations built around that. So, whilst the payment industry itself hasn’t been impacted that much in terms of its ability to cope, the users of the payment facility have been.
“The slowing of business has had a significant effect on the number of transactions and that has put businesses in difficulty, leading to cash flow problems and economic impact. Therefore, economically speaking this is where the payment industry suffers, there are less transactions, so connecting fees and all sorts of dues become increasingly difficult in the current climate.
“Adding to that, because of the crisis companies have to be much faster in delivering relief payments so there are a host of new processes that need to be put in place. Where the payments industry is impacted is that we have to deal with a new situation where existing processes are not well suited.”
The current situation has led to the industry potentially being in a situation where risk assessments have changed. Dunlop revealed if it was down to her and she was at the helm of a payment company she ‘would look across my portfolio and wouldn’t take a one size fits all approach’ and instead ‘would work with each merchant and work out what their needs are’.
She emphasised that agility and the ability to adapt is part of the approach that the EPA is advocating when it comes to dealing with the crisis.
Jones concurred, whilst adding that recurring issue of late payments is exasperated by the current pandemic: “In B2B payments, late payments have always been an issue, so maybe looking at this more closely throughout this period is something that can carry over when it’s done.
“If one part of the chain stops working, the whole ecosystem breaks.”
Dunlop followed up by heaping praise on Ali Baba, after they immediately settled payments when the pandemic hit, as well offering microloans to their merchants.
The pair were united in commending the work of Starling Bank, a firm that has innovated to ensure that everyone is catered for during COVID-19, as the world becomes increasingly cashless and digitalised.
The regulatory framework is also undoubtedly something that has been adjusted to cope with COVID-19. Jones underlined that regulatory bodies, specifically in the UK have been listening and cooperating when it comes to agility and helping firms.
With extensive experience in the banking sector, including at Mastercard and Visa, Dunlop shared her thoughts on the role of the regulator, stating: “The regulator is very focused on the liquidity of companies, they don’t want to see companies fail during this period.”
They are also very focused on the treatment of customers and consumers during this period, as well as employees in the payment industry, but in terms of core regulations and new regulations that were due to come in, ‘have been advocating not manoeuvre from those dates and the regulator is in the same view’.
“A lot of the deadlines that we have for things that will help reduce fraud, all of that is still going ahead and the regulator isn’t going to be looking for extensions on that and we believe that is the right thing to do to reduce fraud.”
On why the payment industry is crucial in restoring economic stability, Jones detailed: “The payments industry is part of the infrastructure and is a facilitator of the economy, so it is crucial.
“I think we will see things for the better, we will also see new attitudes, specifically when it comes to cooperation, it’s something we have already seen with fintechs coming together and the banks putting up recovery hubs.”
Dunlop went onto reveal that she is witnessing businesses that previously didn’t have such a strong digital model, working with payments companies to switch to online models, highlighting gyms as an example.
She continued once again emphasising the importance of flexibility within the approach to helping partners and firms navigate through this period.
Jones concluded by revealing that she has seen the payments industry working with the industry to digitalise firms and operations.