Digesting the Digits – Bank of England temporarily freezes interest rates

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Number crunching is a key component of the payment industry, with digits scattered across the sector’s key stories. 

Each week, Payment Expert digests these digits and brings an overview of the past payments week in numbers. This edition looks at the Bank of England’s latest decision on interest rates, as well as Lloyd’s report on AI.

BoE stops interest rates at 5.25

The Bank of England (BoE) has decided to halt the increase of its bank rate at 5.25% after a frenzy of spikes in the last 12 months.

In a statement, the central bank revealed that the UK economy is experiencing immense pressure after interest rates saw a total of 14 consecutive jumps, reaching the highest-seen level in more than a decade – a fact that is financially hurting both individuals and businesses alike, bearing in mind the already high inflation. 

BoE Governor Andrew Bailey further revealed that there are “no ongoing discussions” to try and decrease the bank rate, as the current top priority for England’s central bank is to squeeze inflation back to 2%, which currently stands at 6.7%. 

When interest rates hit 5% back in June, Rishi Sunak marked the increases as “important” in order to bring down inflation. A separate statement made in June by the Bank read: “Raising interest rates is the best way we have of getting inflation back down to the 2% target. We expect inflation to fall significantly this year.”

In September, this statement was omitted and the official stance of the bank now reads: “Although inflation is falling, we can’t be complacent. We’ll be watching closely to see if further increases in interest rates are needed. And we will need to keep interest rates high enough for long enough, to ensure inflation comes back to normal.”

The next decision on interest rates is expected to come at the start of November.

Lloyds Bank reveals 80% trust in AI from the financial sector

A new report by the bank has unveiled that four in five (80%) leaders in the financial services sector are positive that AI will transform the UK’s economy. 

In terms of the positives and negatives that the technology could bring, only 3% saw it as a threat, while the majority (56%) responded that they only see it as beneficial. The remaining 41% are yet to decide. 

Lisa Francis, Managing Director of Institutional Banking at Lloyds Bank, commented: “The financial services industry is alive to AI’s potential to change how we live and work, and it’s encouraging that most sector leaders see opportunities for their businesses as the technology develops. 

Lloyds Bank: ‘AI will shake up UK economy and boost productivity’

6.4 billion UK cash payments ‘reflective of historical patterns’

Jonathan Vaux – Head of Propositions & Partnerships at Thredd – described the partial return to cash in the UK as a “reflection of historical patterns” that usually mark periods of financial difficulty for the general public.

As inflation and costs rise, cash payments also seem to be proportionally climbing – with 6.4 billion payments made in cash compared to the 6 billion in 2021.

“Unlike the previous major recession in 2008, we are now living in a digital payments age, where consumer digital banking solutions and mobile payment options like Apple Pay have become widespread. The fact that cash usage is rising in this digital era indicates the significance of the current economic challenges,” Vaux pointed out. 

Surge of cash is reflection of historical pattern

24% of Americans ‘rarely or never’ use cash

Temenos has revealed that Americans are expecting an increase in cash redundancy as they gradually move to everyday digital payment use.

According to the firm’s recent study, three in five Americans (58%) think that all payments will be digital in the near future, with this number being 67% among millennials.

Among a pool of 2,000 respondents, 71% have confirmed that they use mobile or online banking for daily payments, while almost a quarter (24%) rarely or never use cash, with an increasing number of people looking for easier payments, Temenos’ Americas President Phillip Barnett commented.

Temenos: US digital payments on the rise as 58% expect fully digitised ecosystem

Jordan receives new digital payments tool as local market heads to $12.25bn

A new SoftPoS offering has been revealed by Middle East Payment Services (MEPS) and PayTabs to satisfy the growing regional hunger for digital payments.

It is understood that the new solution will boost MEPS’ ambitions of expanding into Jordan, where the digital payments market is expected to reach $12.25bn in market volume by 2027. 

Ali Abdel Jabbar, CEO of MEPS, said: “This unique service is in line with the company’s vision towards achieving financial inclusion in Jordan and expanding our customer base of merchants, with the focus on small and medium-sized companies such as home delivery, transportation, and distribution companies.”

Middle East Payments Services provides payment boost with PayTabs