The Payment Systems Regulator (PSR), the specialist economic regulator of UK payment systems, has published its proposed five-year strategy.
The strategy sets out an approach that aims to make sure payments and payment systems work well for everybody and that there is fair competition and access to payments for all. The PSR’s approach will protect and embrace what’s working well, change what is not, and lay the foundations for new products, ways to pay and new payment systems so that they develop with the needs of real people and businesses in mind.
The document is a proposed strategy informed by extensive engagement with stakeholders and the PSR’s experiences and observations since it began work in March 2015. The PSR is now seeking feedback with a view to publishing a final version by the end of the year.
The strategy sets out the PSR’s perspective on payment systems and the markets they support. It considers what is going well, where there is scope for improvement, and the risks and issues that need to be tackled.
The PSR has identified four strategic outcomes that it wants to help bring about in the next five years. These flow into four strategic priorities that provide a framework for meeting this ambition.
- Priority 1: Ensure users have continued access to the payment services they rely upon and support effective choice of alternative payment options.
- Priority 2: Ensure users are sufficiently protected when using the UK’s payment systems, now and in the future.
- Priority 3: Promote competition in markets and protect users where that competition is not sufficient, including a) between payment systems within the UK and b) in the markets supported by them.
- Priority 4: Ensure the renewal and future governance of the UK’s interbank payment systems supports innovation and competition in payments.
In the strategy the PSR also sets out a number of actions it will take to deliver these priorities. Some of the key actions the PSR is proposing include:
- Promoting competition between payment systems so that, for example, in future people may choose to use interbank payments (when a payment moves from one bank account to another, like an online transfer) to buy their groceries. Most people currently use card payment systems to do this.
- Continuing to protect access to cash for those that rely on it.
- Making sure that, as interbank payments develop (like in the example above), so do the consumer protections associated with them.
- Supporting developments to Pay.UK’s governance of the interbank rules so it has greater ability to enforce compliance with its rules and make changes that improve outcomes.
- Understanding and taking account of the perspective of vulnerable consumer groups towards new ways of paying and the choices available to them.
Chris Hemsley, the PSR’s Managing Director, said “Because payments are an essential part of daily life and a vital element in the UK economy, everybody should have a fair choice about how they make and receive them – and be protected when doing so. Our new strategy sets out how we are aiming to make this happen.”
“We will continue our focus on promoting effective competition between the companies that offer payment services to people and businesses – including banks and building societies. But we will increasingly focus on how to make sure that the different payment systems themselves compete with each other: the current card systems; the existing and new ‘interbank’ systems; and any new payment systems that launch in the future. With healthy competition at each level comes new and exciting innovations, more choice for consumers and merchants, and possible savings for all of us in the products and services we buy.”
“Our goal is to make sure payment systems are fit and sustainable for the future so that we can all use them with ease and confidence.”
Commenting on the proposals Gareth Shaw, Which? Head of Money, said “It is positive that the Payment Systems Regulator recognises the need to protect scam victims, but almost five years after Which?’s super-complaint and with hundreds of millions of pounds every year still being lost to bank transfer fraud, it’s clear that action rather than words is needed.”
“Time and again banks and payment providers have fallen short when it comes to protecting victims, so the PSR must show it is prepared to stand up to industry interests. It must ensure all banks and payment providers are covered by a strong set of mandatory protections for consumers, take tough enforcement action against firms that don’t stick to the rules and ensure that all scam victims who are not at fault are swiftly reimbursed when they are targeted by fraudsters.”