The UK’s Payment Systems Regulator (PSR) recently published its proposed five-year strategy, setting out the key outcomes and strategic priorities that will guide its operations. Given the rapid pace of development in payments, the PSR says its ‘ambitious’ strategy is designed to unlock the potential of UK payments. In this alert, we take a quick look at the 4 key outcomes and assess what they might mean for firms operating the UK payments space.
Access to Payments
The PSR seeks to strike a balance between supporting those who are developing new ways to make payments, and ensuring that consumers have access to a service which meets their needs. A key outcome for the PSR is therefore ensuring that all users have continued access to payment services they rely on and to support effective choice of alternative payment options. Firms should be mindful that, while innovation is encouraged, the PSR will act to protect the needs of consumers. Innovators should consider what barriers to entry (e.g. access to existing networks, cost) might prevent a potential user from accessing their service.
The strategy paper highlights recent success in the PSR’s work on Authorised Push Payment scams, most notably its direction to the six largest banks to implement Confirmation of Payee protections over the same time period. The PSR intends for protection in interbank payments to be an ongoing priority and hopes to work with Pay.UK to develop these protections in the coming years. Firms should watch this space to ensure they are ready and able to comply with any new regulation in this area. Overall, the PSR wants to ensure users are sufficiently protected when using the UK’s payment systems.
The third outcome is effective competition in the provision of payment services. The paper highlights a concern that there is not currently sufficient competition in retail payments methods to provide consumers and businesses with desirable long-term outcomes. Therefore, the PSR will focus both on promoting competition between payment systems, as well as supporting and developing interbank services to foster more competition. This is good news for firms developing innovative products and services, who can take advantage of an environment engineered to encourage competition.
The final outcome considers how the governance of the UK’s interbank payment systems can be developed to best protects users. As Pay.UK oversees the creation of the New Payments Architecture – the proposed new method of organising clearing and settling of interbank payments – the governance structure of Pay.UK might need updating. The PSR makes clear its intention is to ensure a sustainable funding model which supports and promotes innovation and competition in overlay services, as well as to support Pay.UK’s governance role and ability to enforce compliance in a way that improves user outcomes. Prudent firms will keep on top of these developments, which are likely to affect their compliance policies in the future.
The PSR is seeking stakeholder views on its proposals by 10 September 2021.
Should you have any questions about the above, please do not hesitate to contact one of the members of the Bird & Bird global payments team.
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