Money Transfer Industry Update - Cash Payments in the UK, FairFX, and PayPal


Marisa Fasciano
Content Specialist
Marisa is a communications consultant based in New York with a background in social research, diversity education, and nonprofit development.  She has lived and traveled abroad extensively… Read more

Despite Growth of Contactless Payments in the UK, Cash Holds its Ground

Even though the volume of contactless payment in the UK tripled last year, cash remains a very popular payment method for British consumers and is even growing in some respects.  According to Bank of England (BoE) data, cash accounted for 44 percent of all payments made by British consumers in 2016.  And there was a half of a percent increase in the number of people who depend almost entirely on cash transactions, which now totals 3.7 million.  

One reason that cash remains king is improved access to ATMs.  Despite the fact that high street banks, such as Barclays, Royal Bank of Scotland, and Lloyds, are collectively shutting down hundreds of brick-and-mortar branch locations, they’re building more ATMs.  Other reasons for cash’s appeal include the absence of risk or concern related to cybersecurity and the lack of transaction fees.  Particularly for low-value purchases, small businesses don’t want to pay fees associated with alternative payment methods like credit cards. 

Victoria Cleland, BoE’s director of bank notes and its chief cashier, reported that the average value of cash purchases in the UK has held its ground at £10.  She believes that cash will remain ubiquitous for commonplace small-value payments.  However, as contactless payment terminals multiply and are being used for smaller and smaller transaction amounts, it remains to be seen which payment method will eventually dominate. 

My Fair Multicurrency Account

In early 2018, international payment services provider FairFX plans to launch a multicurrency current account for businesses called “Fair Everywhere.”  The account, which can be opened in a matter of hours, will allow SMEs to transfer money internationally using FairFX’s foreign exchange rates.  In addition, customers get a reward of up to 3.5% cash back on purchases from major retailers.

Based in London, FairFX got its start in 2007 as an online travel money provider.  Earlier this year, it bought CardOne for £15 million as part of its goal to become a digital banking services co.  "Through the recent acquisition of CardOne, FairFX now has the capability to offer retail and business Bank Accounts with all the functionality you would expect from a bank, namely faster payments, BACs, direct debits, international payments and a debit card," said the company.

PayPal Diversifies While Growing Core Payments Business

Inspired by Chinese payments companies like Alipay (read our review), PayPal intends to diversify its offerings beyond payments through a combination of investments and partnerships.  Since 2015, when the company was cut loose from its parent eBay, it has established more than 25 major partnerships, including one with investing platform Acorns.  PayPal’s recent acquisition of the international money transfer app Xoom has also contributed to its diversity.

According to its PayPal CFO John Rainey, the end goal is “to be an everyday part of our customers’ lives and it’s hard to do that if you are only in payments.”  He considers PayPal’s “two-sided network” of 17 million merchants and 200 million consumers a huge competitive advantage.  In addition to diversifying, Rainey will continue to grow core payment capabilities with a special focus on mobile shopping.  “In today’s age, 50-70% of shopping experiences begin on mobile devices, but mobile devices have the lowest rate of conversion,” Rainey said, “And if that doesn’t scream opportunity I don’t know what does.”


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