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Silvan Frik

By Silvan Frik, Head of Marketing and Communications at SIX Payment Services

Recently I visited Sweden on a business trip.  Everything was going very well until I tried to use a public toilet.  The only way to get in was to send a text from a local Swedish SIM card!

This is an example of how Scandinavian countries have forged ahead with cashless payments, filtering down to just about every level of transaction.  The homeless man on the street selling a magazine called ‘Situation Stockholm’ – their equivalent to The Big Issue – accepts card payments.

Four out of five payments in Sweden are now made electronically or by card and Swedes make these kind of payments at least 260 times a year on average.

Many of the cashless initiatives pioneered in Scandinavia have been replicated across Europe and the rest of the world.  Barely a week goes by without another online payment system launching, whether from the IT giants Apple, Google or Amazon, the telecoms companies, the banks or by corporates such as Starbucks.

So are we heading inexorably for a cashless society?

I don’t think so.  But there are many factors driving out cash, coming from very different origins but heading towards the same conclusion.

In Sweden, the momentum originally came from the unions, seeking to protect their workers from violence during bank robberies in the 1980s.  In this area, there have been exceptional results: just five bank robberies were reported for the whole of 2012 in the country.

Silvan Frik

Silvan Frik

In London, Warsaw and Amsterdam (among other cities), contactless payment systems for public transport have become widespread, if not exclusive.  Customers on London buses can now pay using their credit and debit cards, in addition to the contactless ‘Oyster’ cards introduced a decade ago and now responsible for more than 80 per cent of Londoners’ public transport journeys.  This reduces London Transport’s administration and employee costs.

In my native Switzerland, the government wants to restrict cash payments above a certain level, as an anti-black market measure. The same evaluation takes place in Italy.  Governments everywhere promote electronic and cashless transactions to maximise tax revenues (although some retailers oppose them for the same reason!)

In an electronic society, everything can be observed, checked, followed and stored, whereas cash is anonymous and harder to control.  Governments say that the use of cash leads to illegal behaviour, whereas consumer protection agencies argue that promoting cashless transactions leads to people over-spending.  They have fewer inhibitions when buying things online, or gambling online, than they would if they were handing over cash.

Some consumers are suspicious that card companies or other payment providers are trying to make money out of the data they collect on transactions, which adds to their resistance to go cashless.

But this distinction is changing as each year goes by.  Young people are so used to electronic payments, and to sharing the details of their lives on social media, that they have fewer such qualms.

They are also the ‘mobile generation’, embracing mobile payment technology and the huge increase in convenience, speed and (of course) mobility that this entails.  New products such as Barclays’ Pingit, the Swiss Tapit payment app or the Swedish Swish app all facilitate mobile payments.  The mobile phone is fast becoming the wallet.

Yet this is only the first step in a fast-evolving process.  We will soon see more peer-to-peer payment systems emerging, where payments can be transacted through SMS, or PayPal, Google, or a host of other technologies and platforms.

As soon as these kind of payments can be made widely, across borders, then the whole payments landscape will begin to change.

Meanwhile, there are all kinds of signs that cashless payments are becoming more popular.  In the UK city of Manchester, one shopping district recently held a ‘cashless’ day, sponsored by a card payment terminal provider.

Some retailers found it a positive experience – “People were talking about it and keen to take part in the idea,” said Claire Lockhart, who runs a local pub – whereas others were less happy, because they didn’t want to put off customers without bank accounts, or older people who are less comfortable with card payments.

Personally, I don’t think that we will ever phase out cash completely, because it has a strong utility, is part of our economic identity and enables a certain degree of freedom.  For quite some small transactions it is still the fastest and most convenient payment method, even when compared with contactless payments.

But the direction of travel is clear: cashless payments will grow ever more widespread, even when you’re looking for a public bathroom.


Sunak warns of bill to be paid to tackle Britain’s ‘exposed’ finances – FT



Sunak warns of bill to be paid to tackle Britain's 'exposed' finances - FT 1

(Reuters) – British finance minister Rishi Sunak will use the budget next week to level with the public over the “enormous strains” in the country’s finances, warning that a bill will have to be paid after further coronavirus support, according to an interview with the Financial Times.

Sunak told the newspaper there was an immediate need to spend more to protect jobs as the UK emerged from COVID-19, but warned that Britain’s finances were now “exposed.”

UK exposure to a rise of one percentage point across all interest rates was 25 billion pounds ($34.83 billion) a year to the government’s cost of servicing its debt, Sunak told FT.

“That (is) why I talk about leveling with people about the public finances (challenges) and our plans to address them,” he said.

The government has already spent more than 280 billion pounds in coronavirus relief and tax cuts this year, and his March 3 budget will likely include a new round of spending to prop up the economy during what he hopes will be the last phase of lockdown.

He is also expected to announce a new mortgage scheme targeted at people with small deposits, the UK’s Treasury announced late on Friday.

Additionally, the government will also announce a new 100 million pound task force to crack-down on COVID-19 fraudsters exploiting government support schemes, it said.

(Reporting by Bhargav Acharya in Bengaluru; Editing by Leslie Adler and Cynthia Osterman)

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G20 promises no let-up in stimulus, sees tax deal by summer



G20 promises no let-up in stimulus, sees tax deal by summer 2

By Gavin Jones and Jan Strupczewski

ROME/BRUSSELS (Reuters) – The world’s financial leaders agreed on Friday to maintain expansionary policies to help economies survive the effects of COVID-19, and committed to a more multilateral approach to the twin coronavirus and economic crises.

The Italian presidency of the G20 group of the world’s top economies said the gathering of finance chiefs had pledged to work more closely to accelerate a still fragile and uneven recovery.

“We agreed that any premature withdrawal of fiscal and monetary support should be avoided,” Daniele Franco, Italy’s finance minister, told a news conference after the videolinked meeting held by the G20 finance ministers and central bankers.

The United States is readying $1.9 trillion in fiscal stimulus and the European Union has already put together more than 3 trillion euros ($3.63 trillion) to keep its economies through lockdowns.

But despite the large sums, problems with the global rollout of vaccines and the emergence of new coronavirus variants mean the future path of the recovery remains uncertain.

The G20 is “committed to scaling up international coordination to tackle current global challenges by adopting a stronger multilateral approach and focusing on a set of core priorities,” the Italian presidency said in a statement.

The meeting was the first since Joe Biden – who pledged to rebuild U.S. cooperation in international bodies – U.S. president, and significant progress appeared to have been made on the thorny issue of taxation of multinational companies, particularly web giants like Google, Amazon and Facebook.

U.S. Treasury Secretary Janet Yellen told the G20 Washington had dropped the Trump administration’s proposal to let some companies opt out of new global digital tax rules, raising hopes for an agreement by summer.


The move was hailed as a major breakthrough by Germany’s Finance Minister Olaf Scholz and his French counterpart Bruno Le Maire.

Scholz said Yellen told the G20 officials that Washington also planned to reform U.S. minimum tax regulations in line with an OECD proposal for a global effective minimum tax.

“This is a giant step forward,” Scholz said.

Italy’s Franco said the new U.S. stance should pave the way to an overarching deal on taxation of multinationals at a G20 meeting of finance chiefs in Venice in July.

The G20 also discussed how to help the world’s poorest countries, whose economies are being disproportionately hit by the crisis.

On this front there was broad support for boosting the capital of the International Monetary Fund to help it provide more loans, but no concrete numbers were proposed.

To give itself more firepower, the Fund proposed last year to increase its war chest by $500 billion in the IMF’s own currency called the Special Drawing Rights (SDR), but the idea was blocked by Trump.

“There was no discussion on specific amounts of SDRs,” Franco said, adding that the issue would be looked at again on the basis of a proposal prepared by the IMF for April.

While the IMF sees the U.S. economy returning to pre-crisis levels at the end of this year, it may take Europe until the middle of 2022 to reach that point.

The recovery is fragile elsewhere too. Factory activity in China grew at the slowest pace in five months in January, and in Japan fourth quarter growth slowed from the previous quarter.

Some countries had expressed hopes the G20 may extend a suspension of debt servicing costs for the poorest countries beyond June, but no decision was taken.

The issue will be discussed at the next meeting, Franco said.

(Additional reporting by Andrea Shalal in Washington Michael Nienaber in Berlin and Crispian Balmer in Rome; editing by John Stonestreet)

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Bank of England’s Haldane says inflation “tiger” is prowling



Bank of England's Haldane says inflation "tiger" is prowling 3

By Andy Bruce and David Milliken

LONDON (Reuters) – Bank of England Chief Economist Andy Haldane warned on Friday that an inflationary “tiger” had woken up and could prove difficult to tame as the economy recovers from the COVID-19 pandemic, potentially requiring the BoE to take action.

In a clear break from other members of the Monetary Policy Committee (MPC) who are more relaxed about the outlook for consumer prices, Haldane called inflation a “tiger (that) has been stirred by the extraordinary events and policy actions of the past 12 months”.

“People are right to caution about the risks of central banks acting too conservatively by tightening policy prematurely,” Haldane said in a speech published online. “But, for me, the greater risk at present is of central bank complacency allowing the inflationary (big) cat out of the bag.”

Haldane’s comments prompted British government bond prices to fall to their lowest level in almost a year and sterling to rise as he warned that investors may not be adequately positioned for the risk of higher inflation or BoE rates.

“There is a tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets,” Haldane said.

He pointed to the BoE’s latest estimate of slack in Britain’s economy, which was much smaller and likely to be less persistent than after the 2008 financial crisis, leaving less room for the economy to grow before generating price pressures.

Haldane also cited a glut of savings built by businesses and households during the pandemic that could be unleashed in the form of higher spending, as well as the government’s extensive fiscal response to the pandemic and other factors.

Disinflationary forces could return if risks from COVID-19 or other sources proved more persistent than expected, he said.

But in Haldane’s judgement, inflation risked overshooting the BoE’s 2% target for a sustained period – in contrast to its official forecasts published early this month that showed only a very small overshoot in 2022 and early 2023.

Haldane’s comments put him at the most hawkish end among the nine members of the MPC.

Deputy Governor Dave Ramsden on Friday said risks to UK inflation were broadly balanced.

“I see inflation expectations – whatever measure you look at – well anchored,” Ramsden said following a speech given online, echoing comments from fellow deputy governor Ben Broadbent on Wednesday.

(Editing by Larry King and John Stonestreet)


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