The Payments Association, a trade group representing the UK payments sector, has shared key findings from new research by WPI Economics, which quantifies the massive economic value of using digital payment innovations—such as prepaid cards, open banking and budgeting apps—to address financial exclusion.
The research comes as the payments industry anticipates the publication of HM Treasury’s National Financial Inclusion Strategy, which signals a key moment for advocating for a more inclusive financial ecosystem. The findings demonstrate that digital payment innovations are not just a financial or social tool, but a powerful engine for national economic growth.
While the UK has made progress, millions of people still struggle to access appropriate financial services. The new report highlights how innovation in digital payments is a crucial vehicle for bridging this gap, delivering real-world economic relief and building financial resilience for the most vulnerable consumers.
The multi-billion pound opportunity
The research, commissioned by The Payments Association’s Financial Inclusion Working Group, supported by Mastercard, provides compelling evidence that scaling existing digital payment solutions could lead to significant consumer welfare gains and reduced reliance on high-cost credit.
Increasing the use of pre-paid cards could unlock £210 million in reduced debt interest payments through supporting consumers to budget and helping them build greater financial stability. Furthermore, Personal Financial Management (PFM) apps offer substantial benefits, potentially making individual users as much as £445 better off each year, which translates to a collective boost of up to £24.5 billion to consumer finances annually. This potential for savings is further demonstrated by specific PFM features like transaction “round-ups,” which can save users up to £648 per year. The report estimates that if just 30% of PFM users in the UK were to adopt this feature, it could unlock nearly £1.3 billion in annual savings.
Newer innovations like earned wage access (EWA) schemes provide financial flexibility and liquidity to workers. EWA schemes already saving users more than £69 million a year in fees and interest, preventing reliance on high-interest payday loans for short-term advances (based on an estimated typical advance of £193 taken over a two-week period). Finally, expanding workplace savings schemes, facilitated by account-to-account (A2A) payments, could lead to increased national savings of up to £630 million annually, particularly if they reach the three million people who currently have no savings.
Riccardo Tordera-Ricchi, director of policy at The Payments Association, said: “This research by WPI Economics suggests that payments innovation, across cards, open banking and account-to-account payments, is key to supporting financial inclusion and boosting the economy. We hope that our recommendations are thoroughly considered by HMT before publishing the forthcoming National Financial Inclusion Strategy.”
The report, which includes contributions from payments innovators and industry experts, examines how technologies like cards, open banking and A2A payments are ensuring that innovation will continue to facilitate the creation of solutions for the unbanked and underbanked long into the future.
