Introduction Timeline our 2001 predictions Consumer attitudes Looking to the future Report by Dr Ian Pearson Pay your Way 2025: Future Payments Introduction Timeline our 2001 predictions Consumer attitudes Looking to the future Report by Dr Ian Pearson Previous NeXT 1 InTroduCTIon By Adrian Kamellard Chief Executive, Payments Council Introduction Timeline our 2001 predictions Consumer attitudes Looking to the future Report by Dr Ian Pearson iNTroducTioN By Adrian Kamellard Previous NeXT 2 up until the 1960s we really only A single day for any one of us could involve This report, Pay Your Way 2025: Future had two ways to pay – cash or paying a gas bill by Direct Debit, using a credit Payments, looks beyond the probable to take cheque, but improving technology or debit card in a supermarket, transferring a broader look at what could become available and changing lifestyles have seen money using online banking, taking money in 2025 for the most enthusiastic consumers of a steady stream of innovations since. out of a cash machine connected to the LINK technological advances. With that in mind, we nowadays we take for granted the network or even instructing a solicitor to make asked leading independent futurologist Dr Ian high-value CHAPS payment to buy a house! Pearson to use his expert knowledge of trends extra choice offered by credit and All of these payments were created in the in technology and society to offer his view of debit cards, electronic payments, 60s, 70s and 80s, yet during the last few the potential developments in payments. online shopping and banking. years we’ve seen innovation continue apace and consequently our choice of ways to pay To set the context for Dr Pearson’s predictions, continues to grow. our Head of Policy and Markets, Mike Bowman, reflects on the predictions we made ten years “The Payments Council is the lead ago and considers what factors limited or led the changes that we actually saw. In that time, body making sure uK customers and chip and PIN was introduced and the internet businesses get the payments they need opened the door to a new world of innovation. and want, both now and in the future.” One of the predictions made by Dr Ian Pearson Fast forward to the present day and the world in this report is that we will start to see more of payments is changing like never before. items of ‘digital jewellery’, which can be used The Payments Council is the lead body making as a contactless device to either make or sure UK customers and businesses get the authorise a payment. Other concepts explored payments they need and want, both now and in in his report are: transferring data through the future. A key part of the Payments Council’s handshakes, augmented reality visors, day-to-day work is acting as a trusted source of electronic cash and even tiny electronic data data on payments and carrying out the research printed onto fingers to enhance the security that is required to inform the National Payments of using fingerprints to authenticate payments. Plan and other plans for the future. continued Introduction Timeline our 2001 predictions Consumer attitudes Looking to the future Report by Dr Ian Pearson Previous NeXT 3 our predictions our projects Our own predictions already point towards It is certainly intriguing to look further ahead some potential big changes, long before at possible future payments, but there is 2025. The adaptability of the chip and PIN plenty happening in the way of innovation technology used on our bank cards means right now. The Payment Council’s mobile that the chip need not be on a card, but payments project is working to help banks instead could be on a whole range of and others make it possible to pay securely platforms, which can enable payments on a mobile without needing to know account to be made by mobiles and other devices. details. This collaborative project should deliver new benefits for customers of any financial Arguably the biggest factor in the acceleration institution that wants to offer the service, with of innovation over recent years has been the a new central service being built that can link internet and the changing way that we are using mobile phone numbers to account details and it. Contactless technology (also known as Near make it possible to seamlessly make payments Field Communication, or NFC) is also driving from one institution to another. It could become change – it has now been available in the UK an attractive option when making person-to- for five years and is approaching a potential person payments – such as paying a friend tipping point in terms of usage. for lunch – or where a business doesn’t accept cards but needs immediate payment which As an indicator of how quickly things can they can check at a glance. “arguably the biggest factor in the change, just a few years ago, back in 2008, acceleration of innovation over recent the Payments Council introduced the first new Another major project for the Payments years has been the internet and the payment system in over 20 years. This is called Council goes above and beyond payments changing way that we are using it.“ Faster Payments and it has revolutionised the to help customers switch current accounts. time it takes to process a phone, internet or It will deliver a faster, easier switching service. standing order payment, enabling them to be The new service will be up and running in made almost instantaneously outside of banking September 2013 and will be backed by a hours, seven days a week. It was built to meet customer guarantee. It will ensure the same future demand and by only its third birthday level of service across the industry regardless it had processed over a billion payments. of where a current account is held. continued Introduction Timeline our 2001 predictions Consumer attitudes Looking to the future Report by Dr Ian Pearson Previous NeXT 4 Security and virtual worlds As Dr Pearson rightly points out in his contribution to the report, technological Looking ahead, the next generation of advances will offer new ways to authenticate customers will have grown up online, fully our payments – so could potentially make connected through social networks. This things safer. In any case, customers in the continuous and uninterrupted conversation will UK enjoy excellent legal protection from probably lead to greater demand for payments fraud and should do in future too. For our to be instantaneous or “real-time and 24/7”. part, the Payments Council will continue our The barriers between ‘real’ and ‘virtual’ worlds proactive work with the public and private and communities are not as they can appear sectors to ensure customer authentication to older generations – there will be a need for standards are set at an appropriate level – new payment products to fill this new space no matter whether we are talking about a whilst upholding the high levels of security signature, a PIN or a handshake. and reliability we’ve come to expect. Innovation in payments unfortunately isn’t Pay your Way limited to new products being created – Pay Your Way already contains a wealth of there will always be a battle with criminals information on the ways we currently pay in who want to exploit our payments for their the UK, ranging from the familiar, like cash own financial gain. The research we carried and cheques, to what we now consider cutting out to accompany this report has demonstrated edge – mobile payments and beyond. Looking that security remains the foremost concern of back from 2025, our opinion and usage of people using payments – more than half of us these payments may have changed. Regardless “regardless of any changes, the worry that new technology won’t be as secure. of any changes, the Payments Council will Payments Council will continue continue promoting innovation, inclusion and promoting innovation, inclusion and integrity in payments and strive to ensure integrity in payments and striving that the right options are available to meet to ensure that the right options are consumer needs. I hope you enjoy the report. available to meet consumer needs.” Introduction Timeline our 2001 predictions Consumer attitudes Looking to the future Report by Dr Ian Pearson Previous NeXT 5 TImeLIne A history of innovation in payments Introduction Timeline our 2001 predictions Consumer attitudes Looking to the future Report by Dr Ian Pearson TimeliNe Previous NeXT 6 We’ve pulled together a simple timeline to show how far money and payments have come. This certainly isn’t everything, but it gives an indication of particular milestones in our history. 600 BC 12th Century 16th Century 1659 1668 1717 Coins Bill of exchange Receipts system Date of the earliest Bank of England Bank of England introduced in Italy developed known surviving established introduces printed The earliest coins were English cheque cheques made in the seventh Bills of exchange were Goldsmith-bankers would There were calls for a century BC in the ancient the predecessor to accept deposits of gold Cheque use peaked national or public bank kingdom of Lydia (part the cheque, allowing and issue receipts to in 1990, when 4 billion to mobilise the nation’s of what is now Turkey). traders to buy and sell the user. These usually cheque payments were resources and broker a goods without having to carried the name of the made. Since then, loan for the government. carry cumbersome and depositor allowing them to cheque use has fallen William Paterson valuable gold and silver. circulate in a limited way. by about 40 per cent, proposed a loan scheme This lays the foundations although more than 682m of £1,200,000 to the for paper-currency.