Reaching several milestones, the report shows how:
- greater access to payment systems has seen more players enter the market
- the PSR is leading the fight against Authorised Push Payment (APP) scams
- the regulator is focused on ensuring that consumers continue to get widespread access to cash through free-to-use ATMs.
‘When the PSR became operational in 2015, a lack of collaboration was hampering innovation; the interbank payments infrastructure was dominated by the big banks; and it was too hard for new players to get access to payment systems and introduce real competition in the market.
‘None of us were getting the most out of the payments process, but now things have changed; in the last year alone we’ve overseen major developments which have already produced tangible results for those in payment systems and the people and organisations that use them. Coupled with the changes from previous years, the payments landscape is radically different from when we started work.’
The PSR has contributed to this change by shaking up the market, particularly in its open access programme – a cornerstone piece of work on making it easier for payment service providers (PSPs) to enter the market. In 2017, seven new PSPs joined one or more of the interbank systems, making it another record year for new participants. This has led to people and businesses having greater choice in the way they move and manage their money.
Significant progress has also been made in redeveloping the infrastructure of these payment systems. The New Payment System Operator (NPSO) having already taken over responsibility for three interbank payment systems (Bacs, Faster Payments, and Cheque and Credit), and is designing a new payments architecture (NPA) for the UK.
This is a once in a generation change to the payments industry. It will enhance the capability and capacity of the operators, streamline governance arrangements and reduce the complexity and costs of having three separate operators, meaning the NPA will drive innovation and competition in the interests of users.
Working in the best interests of everyone that uses payment systems is one of the PSR’s statutory objectives, and also a guiding principle in everything the regulator does. One clear illustration of this is its work leading the fight against APP scams. Throughout 2017, the PSR has worked with the payments industry and consumer bodies to identify what measures need to be in place to combat this type of fraud. This has included designing a contingent reimbursement scheme to compensate the victims of these scams.
Consumer protection has also been a focus in the PSR’s work to ensure consumers continue to get widespread access to cash through free-to-use ATMs. In 2017, the ATM network operator LINK announced changes to the interchange fees banks pay when people use ATMs, leading to concern about cash machines closing. The PSR required LINK to report to it monthly on the impact of its changes and to take action to address any unexpected effects. The regulator has been very clear that it will hold LINK to account if it doesn’t deliver on its commitments. This piece of work reinforces the PSR’s fundamental vision: payment systems that work well for those who use them.
The PSR has been instrumental in driving change in the payments industry, and change is happening fast. The major developments it has driven and overseen in the last year are paving the way for a more advanced and technological payments world. It is one where the PSR will continue to scan the market for potential competition concerns, encourage fair and open access to payment systems, and delve into new areas like the use of payments data to understand what role it might play in advancing its objectives.
The solid foundation that the PSR has built will help it will continue to deliver improvements for everybody that uses and relies on payment systems.
- The PSR has three statutory objectives: to promote effective competition in the markets for payment systems and for services provided by those systems, including between operators, payment service providers and also infrastructure providers, in the interest of service-users; to promote the development of innovation in payment systems, in the interest of service-users; and to ensure that payment systems are operated and developed in a way that considers and promotes the interests of service-users.
- The PSR is the regulator and concurrent competition authority for payment systems in the UK and all participants in payment systems (payment service providers, operators and infrastructure providers to those payment systems).