Creating a more competitive marketplace is key
Competition in payments can improve outcomes for people and businesses by stimulating innovation, improving services and lowering prices. This is one reason we focus on making sure conditions are right for competition – both now and in the future.
This includes the PSR’s work to unlock the potential of open banking, as well as work to oversee Pay.UK’s delivery of the New Payments Architecture – an initiative by the UK payments industry to modernise and future-proof account-to-account payment services.
Regulatory directions to improve markets
General Directions are addressed to participants in payments systems or specified classes of participants). For example, we’ve issued General Directions aimed at improving the ability of entrants to gain direct access to payment systems by requiring open, fair access terms and conditions and regular reporting.
Specific directions and requirements are addressed to only certain participants in regulated payment systems or participants of a specified description (such as a named operator of a payment system). For example, we’ve issued Specific Directions requiring providers of card-acquiring services to provide information to businesses to encourage them to search and switch, or negotiate a better deal with their existing provider.
Concurrent powers to enforce competition law
Under Section 54 of the Competition Act 1998, the PSR has concurrent powers to enforce competition law on anti-competitive agreements and conduct in relation to participation in payment systems in the UK.
More about our enforcement work can be found here.
Leniency arrangements in the regulated sectors
Parties who come forward with information on cartel activity may be eligible for reduced penalties under the leniency regime. We stated in our CA98 guidance that we would expect leniency applications to be made directly to the Competition and Markets Authority (CMA).
To protect the integrity of the leniency regime, we have agreed with other concurrent regulators that the CMA should act as a single port of call for all leniency applications. We believe this position will provide further certainty and transparency for leniency applicants and ensure leniency is granted in a fair and consistent manner.
The CMA conducted a consultation on arrangements for the handling of leniency applications in UK regulated sectors and has published a report outlining stakeholder responses, which were in favour of the approach.
Please see the CMA’s website for further information, or, for leniency enquiries or applications, call the CMA’s leniency number: 020 3738 6833.
Environmental sustainability guidance
On 12 October 2023 the CMA published Guidance on the application of Chapter I of the Competition Act 1998 to environmental sustainability agreements (‘the CMA’s environmental sustainability guidance’).
Under section 61 of the Financial Services (Banking Reform) Act 2013, the PSR has concurrent powers to enforce competition law in relation to participation in payment systems. The PSR will have regard for the CMA’s environmental sustainability guidance in the application of our concurrent competition powers.
PSR and Sustainability
In January 2022, we published our Strategy, noting that the drive for greater sustainability will also affect the nature of payments and therefore what payments need to do. The movement to a more sustainable economy will be one factor that creates new use cases in payments and might require changes to how payments work. It will be important that payment systems are flexible enough to allow for new payment services, particularly where those services provide environmental benefits.
We welcome stakeholders bringing to our attention uncertainty in relation to specific potential ESG-related initiatives that may raise novel and significant concerns. We will consider whether and how we can either provide clarification, take other regulatory actions and/or direct enquiries to and work with the CMA.
We welcome the CMA’s guidance and will continue to collaborate with the CMA in this area.
Competition Director Disqualification
On 6 February 2019, the CMA published its Competition Disqualification Orders (CDO) Guidance.
The PSR will have regard to the CMA CDO Guidance where appropriate.
Market reviews are one of the principal ways in which the PSR investigates the market for payment systems, or the markets for services provided by payment systems, to see how well they are working for service users (i.e., those who use, or are likely to use, services provided by payment systems).
We have two ongoing marking reviews into card fees - one looking at scheme and processing fees, and the other at cross-border interchange fees. You can find details about all of our market reviews here.
PSR PS 15/2: Final Guidance - Competition Act 1998 & Market Reviews, Market Studies and Market Investigation ReferencesEarlier this year we consulted on our concurrent competition powers in parallel with the Financial Conduct Authority (FCA).
Governance of payment systemsHow the industry is governed and decisions are made