The age old debate about using cash or new electronic methods was ignited again at a panel session about payments infrastructure – with one participant stating consumers are being pushed down routes where they have no choice.

The Westminster Business Forum event on the future of payments in the UK was opened by New Payment System Operator (NPSO) chair Melanie Johnson, who laid out the work her organisation was doing to bring the country’s disparate payment systems under one umbrella.

She also announced plans to update the underlying payments infrastructure, with a procurement process being worked on for the new architecture that is scheduled for delivery in around four years.

“We must consider how we future proof the platform, as we are committed to assuring transition goes to plan,” Johnson stated, adding that the API specifications for mobile payment systems Paym will be published later this year.

In the panel session that followed, there was some debate about how competition within such tenders would play out, with Ron DeInevo, executive director for Europe at ATM Industry Association, saying that “competition in financial services makes me laugh”.

He explained how the UK’s building societies were destroyed by “greedy boards of directors and politicians”, while the likes of VISA and Mastercard now simply buy up any significant competition.

“Don’t delude yourself about smaller competitors coming along to save things either”, he continued, noting the example of iZettle’s founder Jacob de Geer recently selling out to PayPal, despite promising to revolutionise the industry.

Jerry Norton, vice president for global financial services at CGI, argued that while there should be one organisation which owns the payment infrastructure from a monitoring point of view – which is answerable to the people – in terms of the actual service provider of that infrastructure, there should be two or more, to combat concentration risk.

“As for competitiveness – interoperability means many payments systems fail as they’re not ubiquitous enough,” he said. “Payments services must be universal, like the Post Office… fragmentation helps nobody.”

Otto Benz, director of payments technical services at Lloyds Banking Group, responded that there has never been any desire to cut market participants out, suggesting that “as a bank we prefer to have a network where different participants can compete on a level basis”.

Richard Gleed, senior adviser at CEPA, noted that it’s still unclear how the competitive tender process will be actually carried out, as no payments system has ever changed its infrastructure provider.

DeInevo took issue with the idea of competition necessarily driving innovation or consumer benefits, stating that it’s all still about the bottom line profit for financial services firms.

“Competition will only work if there’s a legal infrastructure in place to stop organisations being gobbled up. Government action required, then let’s focus on what the public really need,” he commented.

“We’re being pushed down routes where we don’t have choice. I’m not supporting cash is king, but we need choice; be transparent about the costs involved, don’t just take it away.”

Benz pointed out that if distribution networks become unavailable then it’s going to be hard to switch back to cash, so the resilience of electronic payment systems is paramount.

Norton agreed that if everything is done electronically, the system becomes susceptible to power cuts or network problems, “so cash is a brilliant fall-back”, but the Bank of England needs to look at systemic risk, as “they have a bigger problems the more electronic we get with payments”.

Johnson concluded that the discussion has to be for the future of all consumers, with the solution being something simple and usable, adding that “we have to discuss with younger generations about what they’re using”.

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