Giving Brits greater control over how they manage their day-to-day finances and taking on fraud are at the centre of a new regulator-backed strategy that promises to make payments fit for the 21st century.
While insisting that the UK payment systems are among the most advanced in the world, processing 700 transactions a second, last year the Payment Systems Regulator (PSR) set up a forum to sketch out a strategy to fit for the digital age.
Reporting back, the Payments Strategy Forum is promising more control and assurance for people over how they manage their finances, safer and more secure banking, and opportunities for new banks and fintechs to compete.
The strategy recommends the consolidation of the governance of three payment system operators - Bacs, Cheque and Credit Clearing Company and the Faster Payments Service - into a single entity to begin the process of simplification. This new entity will be responsible for implementing the centrepiece of the Forum’s strategy - a new payments architecture that is simpler, more accessible and more responsive to innovation.
More specifically, to tackle fraud the strategy proposes a new 'Confirmation of Payee' safeguard, helping people to avoid sending payments to the wrong account, either by accident, or being tricked into doing so, by ensuring a confirmation of the recipient is sent to the payer before any funds leave their account.
Another key proposal is the introduction of ‘Request to Pay’, allowing customers to authorise a regular payment, such as a utility bill or gym membership, before the company withdraws the money from their account. This, says the forum, will be a huge boost to people on variable incomes who may struggle to settle their accounts at the same time each month.
Ruth Evans, chair of the forum, which is made up of members from consumer groups, businesses, fintechs and banks, says: "It’s important that we give people more control over how they manage their money. This is especially true in the ‘gig economy’ as people move away from traditional nine to five jobs, and adopt more flexible working patterns."
The forum says it has set out a roadmap for work to start immediately that establishes the building blocks to meet the ambitions of the strategy by 2020.
Hannah Nixon, MD, PSR, says: "We don’t want the Forum to work in isolation. The Strategy is just one part of a wider shake-up of the payments industry, from supporting collaborative innovation to protecting people from fraud. The work of the Forum sits alongside work we are also doing to increase access to payments systems and restructuring the payments infrastructure.
"When you put it all together the bigger picture is a UK payments industry that is vastly different to the one we saw when the PSR went live in April 2015. The work we are undertaking today will better serve consumers, businesses and the wider UK economy to ensure that the UK payments industry continues to be recognised as one of the most advanced and resilient in the world."