The Bank of Finland has published a selection of articles on payments from its forthcoming ‘Bank of Finland Bulletin’ publication in connection with the Payments Forum held on 19 May 2021. The publication and the presentations given at the Payments Forum explore the impacts of the COVID-19 pandemic on payments, the development of payment services in Europe, the ramifications and opportunities of a digital euro, and the role of preparedness in the financial sector. At the same time, the first instalment of payment statistics for 2020 will be published.
Several long-brewing trends in retail payments have been accelerated during the pandemic. Mobile and contactless payments have gained popularity, while the use of cash has waned. ‘In December 2020, almost 60% of card payments were contactless, and many consumers reported having given up cash payments entirely,’ stated Dr Tuomas Välimäki, Member of the Board of the Bank of Finland. ‘However, cash is still the primary method of payment for about 350,000 Finns, and it is still needed as a fall-back in situations where other payment systems are disrupted, for example.’
Two important trends in payments are instant payments and internationalisation. Responding to these trends is one of the goals of the European Central Bank and the European Commission for the coming years. Having a broad range of payment methods equally available everywhere in the euro area would be a boon for consumers. ‘The development of payment services is necessary, in particular to avoid too concentrated market. There needs to be a sufficient number of alternatives on offer to sustain a competitive equilibrium on the market. New payment solutions based on instant payments could promote competition and operational reliability,’ averred Dr Välimäki.
As the role of cash has waned, many countries have begun looking into the possibility of granting consumers access to digital central bank money. Authorities in the euro area are currently surveying the possibilities and potential effects of a digital euro. ‘Central banks are not looking to replace the private market for payment service providers and developers. Instead, a digital euro would best serve as a push for innovation and impediment to excessive pricing,’ noted Dr Välimäki. ‘Regardless of the future form of money, central bank money will always guarantee its users a high degree of privacy and serve as a payment instrument without credit risk in the euro area,’ Dr Välimäki stressed.
Bank of Finland Governor Olli Rehn notes that payments have become more susceptible to crises in recent years. Part of the Bank of Finland's mission is contributing to the reliability of payment systems. ‘We are concerned about disruptions and other eventualities that Finland needs to be prepared for in order to ensure that payments and transactions are not jeopardised under any circumstances. We cannot afford to underestimate the risks. The financial sector needs comprehensive back-up systems that can be maintained and activated using domestic resources. I am confident that the sector shares our serious concerns over national preparedness and the need to take action.’
Read the latest and past issues of the Bank of Finland Bulletin.
Watch the recording of the Bank of Finland Payments Forum (in Finnish)