By Neil Harris, Chief Commercial Officer at Global Processing Services and Chair of the Financial Inclusion Committee at the EPA.
Declining real wages, increased income volatility, the squeeze on benefit payments, along with the increasing cost of living, have made it harder for many people to make ends meet. And as banks have pulled back from providing credit to less profitable individuals and businesses following the financial crisis, more and more people are struggling.
Without access to appropriate financial services, people pay more for goods and services and have less choice and less control over their spending and saving – known as the poverty premium. The Financial Inclusion Committee estimated that the poverty premium costs low income families around £1,300 per year. But the impact of such exclusion is not just financial. It also affects their prospects in education, employment, health, housing, and overall well-being.
Financial exclusion affects 13.5 million people living in poor (cite stats in the footnotes), low-income households, estimated to be 21% of the UK population, in 2015. By 2016, this had increased slightly to 22%. More than half (55 per cent) of those in working families are now living in poverty – a record high.
How people buy and pay for products and services is at the heart of financial inclusion. If payment is simple, secure, convenient and value adding, people are more likely to become and remain part of mainstream society.
Recently, the Emerging Payments Association (EPA) led a large delegation of fintech companies, all of which provide a financially inclusive payment products or services, to present to an audience of 32 senior managers from the Department for Work & Pensions (DWP).
Developed by the EPA’s Project Inclusion team, the event showcased some of the most innovative payments innovations to those responsible for disbursing benefits to one in three of the UK’s population. The portfolio included solutions from EPA members allpay, PCT/Change Account, GPS, i-movo and MCOM, alongside our Benefactor Mastercard. By the end of the day’s session, all DWP executives were keen to understand in greater depth how the EPA and its members can help solve the problems of the financially excluded.
What’s more, they wanted us to provide not only the DWP, but all other public-sector departments using payments, with a list of ‘Approved Payments Providers’. Their ambition for this list would be to deliver a ‘signpost’ to these payments companies and provide government departments with a steer on which companies can enable multiple demographics to become financially included.
Our vision is that, in future, it won’t be such a chore to reach payments buyers in the Public Sector and that we, in partnership with our members, can facilitate greater communication between the government and financially inclusive payments companies. We believe that the PayTech industry has the tools and the technologies to improve lives everywhere by enabling those underserved to be financially included. As a result, we hope to help resolve the financial exclusion problem for millions of people nationwide.
The members of the financial inclusion committee include:
Project Lead: Steve Shirley – Vice President – Public Sector at Mastercard
Project Mentor: Neil Harris – CCO at Global Processing Services
Emily Utton – Head of Account Management at Global Processing Services
Sam Mazloum – Director, Government at Mastercard
David Piper – Account Switching Services Manager at Bacs
Simon Thomas – Prepaid Product Manager at allpay
Deanna Fernandez – Account Management – Card Solutions at Paysafe Group
Tony Coyne – CEO at Mobile Commerce & Other Media
Deborah Levy – Managing Director, Engage at Contis
Ross Borkett – Head of Strategy & Programme Development at Post Office
Ged O’Neil – CEO & Co-Founder at Auden
Featured in EPA – See full piece here