The Payment Systems Regulator (PSR), the specialist economic regulator of UK payment systems, has published a proposed new 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.
Chris Hemsley, the PSR’s Managing Director, commented:
“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.”
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.
Key elements of the PSR Strategy
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.
What this looks like in practice
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.
More detail on the actions the PSR wants to take can be found in Chapter 4 of the document.
In future the PSR’s focus may need to change depending on new developments or where it sees evidence of harm to people or businesses, including where competition isn’t working well in a particular area. As the sector evolves, so too will the PSR’s role adapt accordingly.
What happens next
This document is a proposed strategy and the PSR is now seeking feedback from everyone with an interest in payment systems and how they work. The deadline for responding is 10 September 2021.
This will help it finalise its approach and ensure the PSR is focused on the right outcomes, and - ultimately - has a strategy that is balanced and credible in the eyes of those it regulates and protects.
As well as gathering written feedback the PSR is arranging a series of engagement events to listen and understand the views of its stakeholders. More information about these events can be found on the PSR website [LINK].