The erosion of payment choice isn’t just inconvenient, it’s anti-democratic, argues Ron Delnevo, Executive Director Europe for ATMIA
Are you tired of being told what to do all the time? If so, join the club! Many of us have exactly that feeling.
Democracy isn’t the most common system of government in the world – but even where it is nominally in place, many so-called democratic governments seem to want to unnecessarily limit the rights of their citizens. Security is often made the excuse these days but, when all is said and done, if we lose most of our personal freedoms to protect us, we are little more than prisoners of the system, with our DNA stored, our every move watched and penalties imposed for even the most minor push-back we might make.
Governments want to limit our choices to exercise control – and massive commercial enterprises have an identical ambition.
Henry Ford reportedly told prospective customers for his Model T that ‘you can have any colour, so long as it is black’ and that is exactly the same message that many businesses give their customers today when it comes to payments.
In this day and age, with the public, in theory, having so many options as regards how they can pay, it is simply not good enough to give them no choice. It’s much worse, of course, if the customer is effectively trapped in an environment that is controlled by the business dictating to them.
Motorway services in the UK are a case in point. I once suggested to an executive at one of the m-way services operators that it might be seen as a bit of a rip-off to charge high fees for access to cash at ATMs, considering that customers did not have a convenient option to go elsewhere. The reply I got was along the lines of ‘they believe we rip them off anyway, so what does it matter what we charge them?’.
Another example from the field of transport: British Airways will not now accept cash for the purchase of food and drinks on its short-haul flights. I have seen passengers having their food and drinks served, only to have their proffered card refused or rejected by the point of sale terminal and, even though they had cash available to complete the purchase, being forced to return the food and drinks, including cups of tea and coffee.
That is a complete and utter disgrace and appalling customer service. But then so many businesses seemingly don’t want to deliver decent service at all. Human contact is being reduced in many service environments, with ‘cost reduction’ the usual excuse.
Now, it may seem strange for someone who supports ATM use to bemoan the lack of personal service. However, it must be remembered that the inventor of ATMs initially viewed them simply as a way of getting cash outside of bank branch opening hours. Today, of course, bank branches are an endangered species, verging on the extinct, so we need ATMs to replace them entirely. That is very sad, but King Cnut had more success with tides than any campaigner has enjoyed in keeping bank branches open. So, what are we going to do to stop customers’ ability to select their preferred payment – their payment choice – being destroyed?
Some people, including Natalie Ceeney, Chair of the UK’s Access to Cash Review, seem to believe that voluntary arrangements can safeguard payment choice. I am far from convinced of this and my worry is that if too much time is spent seeking agreement on voluntary measures, we may find payment choice has been eroded beyond the point where it can be saved. Once it is gone, who will be prepared to foot the bill for restoration? Nobody, would be my educated guess.
In my view, what we need now is not fine words: we need action. To this end, my colleague Debbie Smyth and I, two financial services professionals with more than 50 years’ experience between us, have developed A Charter for Payment Choice. It covers six crucial issues and details legal requirements that need to be put in place to safeguard payment choice.
In essence, the Charter focusses on acceptance and access. Get those matters right and any threat to payment choice will be removed.
Of course, a Charter in itself is not enough. It needs to be implemented. To this end, Debbie and I will be circulating the Charter widely to governments, central banks and regulators. We will also follow up with them to press for implementation.
It will be very hard work – but what choice do we have? Without payment choice, democracy is just a word and personal freedom an illusion.
SIX steps to A Charter for Payment Choice
- Businesses that accept in-person payments (including through vending machines) will be required to accept any payment method that accounts for more than five per cent (by number not value) of the total annual in-person payments to the business in the country in which the payment is made. Any business that does so, and provides full transparency of all charges related to those payments, shall be eligible to apply for a CE Mark* (or equivalent), to be awarded by the relevant national regulator.
- Businesses shall be required to make clear at point of sale the transaction limits that apply to each payment method. For avoidance of doubt, it shall be a legal requirement to accept all payment methods up to a limit of €100 or the equivalent. This limit may be varied, upwards-only, by national regulators to meet market conditions.
- All business-to-business fees relating to payments shall be set by each nation each year, based on a transparent cost-based methodology.
- Any direct charges made in connection with in-person payments are to be fully transparent and subject to specific approval by the customer, prior to the completion of the transaction.
- All bank branches shall be required to provide access to deposit and withdrawal facilities for cash, both notes and coins.
- Every nation shall require the development and adoption by all card Issuers of a Universal Cash Deposit Transaction for both notes and coins, allowing members of the public and businesses access to deposit facilities at any bank branch or at any machine equipped with cash deposit functionality. Universal deposit is to be made into a bank account, with maximum individual transaction and daily limits to be set to meet reasonable national anti-money laundering requirements.*The CE Mark is a certification that indicates conformity with health, safety, and environmental protection standards for products sold within the European Economic Area.
This article was published in The Fintech Finance Magazine: Issue #12, Page 56 & 57.