This is the text of the speech as drafted and may differ from the delivered version. This speech was delivered by our Managing Director, David Geale, at the Payments Regulation and Innovation Summit on 21 January 2025.
Good morning, thank you for inviting me to speak today.
For those of you who don’t know me, I am David Geale, Managing Director of the Payment Systems Regulator (PSR) and Interim Executive Director of Payments and Digital Finance at the Financial Conduct Authority.
This is a new joint role – reinforcing the importance of close working between the PSR and FCA in delivering change, which will be one of the themes of my speech today.
But today I’m here with my PSR hat firmly on and will focus on the Strategy Update PSR published last week. Matthew Long will be on shortly and will be talking about the role of the FCA – so I will particularly focus on the PSR’s priorities in this speech. But it is important to be clear that joint working between all the regulators, particularly for payments, FCA and Bank of England is high on the priority list and is essential to delivering positive outcomes in payments, especially on topics like fraud and open banking.
As this audience knows well, UK payments are a fundamentally important part of our everyday lives. In 2023 there were over 48 billion payments, with over £100 trillion flowing through our payments infrastructure. To put that in context, UK GDP in 2023 was £2.7 trillion, meaning the amount of money running through the UK payment systems is many times the size of the UK economy.
That’s not surprising. We do so much with payments every day - normally without thinking. That’s a good thing – that proves they’re working for the most part for users and for business.
But that doesn’t mean that there aren’t challenges. There are also important opportunities for the future – helping to ensure that payments – and the systems which underpin them – work even more effectively now and into the future.
The PSR’s role
The PSR plays an important role in supporting thriving and effective payment systems. We seek to achieve growing, thriving, world-leading payment systems. These are systems where competition and innovation deliver accessible, convenient, secure, trusted and value for money services that meet people’s and businesses’ needs.
Payments play an essential role in supporting economic growth – which is clearly a key issue for our country and a central focus for Government. Supporting economic growth has always been central to what we do - and runs through all of our objectives. We have a regulatory principle to support sustainable economic growth – and it informs our approach.
We therefore support the Government’s growth mission and will continue to work with them on that shared endeavour.
The National Payments Vision
I wanted to talk first about the National Payments Vision. This sets a lot of the regulatory and policy context for payments over the coming year, so is a good place to start.
We are enthusiastic about the opportunity that the National Payments Vision provides – particularly the clarity it brings to our role and the strong emphasis it places on competition and innovation, with a focus on driving progress and positive change.
We fully support the view that innovation, competition and security are the key areas of focus as the UK payments infrastructure evolves to meet new technology opportunities and changing service user needs. These themes align well with the PSR’s objectives, providing a strong basis for driving forward change for positive impact.
Where are we now
Before turning to the PSR’s forward priorities, it is important to take stock of where we are.
We had a busy year of delivery last year and are proud of the results.
On fraud, we have always been clear that keeping a strong focus is essential. Promoting high standards of consumer protection and ensuring safety for those making and receiving payments is core to customers having trust and confidence, and to ensuring they are protected.
Our world leading measures to require the reimbursement of victims of APP fraud have been successfully implemented, creating strong incentives on firms to address fraud in the first place. This is showing results.
Since the PSR’s policy came into effect in October, UK Finance data shows that well over 90% of in scope claims have been reimbursed – significantly up on figures of around 65% in previous years.
Initial comparisons with estimated data points calculated from UK Finance's annual fraud reports suggest numbers of claims have been largely in line with historic trends, despite hundreds more firms now reporting data. And there have been no reports of increases in first party fraud and no evidence of spikes in other types of fraud.
We recognise it is still fairly early days, and continue to monitor the impacts closely, engaging closely with industry and consumer representatives to understand their experience.
Alongside, we also shone a light on where fraud is coming from. We published data in December which showed that fraudsters use major social media platforms, technology platforms, and the telecommunication sector to commit APP scams against UK consumers, leading to losses in the hundreds of millions.
Our data, which was collected by payment firms and based on consumer reports at the time of when a victim reports a scam, showed that:
- £341 million was lost to APP scams in 2023. Over half of these were reported by victims as originating on Meta platforms
- Telecommunication and email providers were recorded as being targeted by fraudsters to carry out a significant amount of APP scams.
- Meta platforms (Facebook, Instagram, WhatsApp) feature as the top three platforms being targeted by fraudsters to carry out the most common type of APP scam – purchase scams
It is clear, that to make significant inroads to prevent APP scams, a whole system approach is needed.
All ecosystem actors need to take action to prevent fraudsters contacting victims and earning their trust. This includes technology, telecoms and social media platforms, who have a vital role to play.
We will keep our APP scams policies under review, and are commissioning an independent evaluation of our policies, to start later this year – 12 months from the start date of the reimbursement policy. We will consider consumer harm experience, any unintended impacts on investments.
On open banking, we have seen significant progress as open banking continues to mature. Consumers and business are using it – with over 11 million users. The stage is set for it to go further, helping to support competition and choice.
And to round off last year, we published our market review into cross-border interchange fees. Following detailed analysis and extensive engagement, we found that increases in cross border interchange fees since 2021/2022 are costing businesses £150-200 million extra per year.
We are now consulting on a proposed price cap to protect UK businesses and we have invited views. Cards play an important role in our economy are popular with consumers and merchants, and generally work well. But where we have competition concerns and users are being harmed, we will not hesitate to act.
All of this is a firm foundation to build upon.
Mid-Strategy review and the future
So, turning to our future priorities.
We have just reviewed our five-year strategy that we launched in 2022 to assess where we are and what should be our priorities over the next two years, helping us to have the strongest positive impact.
We are grateful to all stakeholders which provides views and input – and we listened carefully to your views.
Last week, we published an update which sets out our core commitments.
Priority 1: We will complete the work that we have started.
We have delivered a lot already, but some of this is not yet complete. We will focus on completing that work to deliver the benefits we want to see.
This includes fully embedding our APP fraud reimbursement requirements, which I talked about earlier. We will continue to work with industry on this agenda, providing support where we can and publishing data to transparently set out the results
We will also commission an independently led review of the requirements – and what impact they have had – both on preventing fraud and any impacts on investment.
Throughout all of this, we will work closely with the FCA on fraud. Matthew will speak later about some of the FCA’s priorities on fraud.
Another area where we are working ever closer with our FCA colleagues to deliver change and promote innovation in payments is open banking.
The work on VRPs is forging a path for future innovative open banking, so it has strategic importance that will benefit consumers, merchants and the firms that provide VRP services.
We will continue to push for industry progress alongside FCA colleagues, in particular for PSR to deliver Phase 1 of the commercial model. Industry has an important role to secure the delivery, and we remain willing to support. In some areas we think further regulator involvement is needed, particularly around ensuring open banking transitions to a long-term sustainable commercial model and to consider whether some form of mandated participation is necessary.
We will shortly publish our recommendations on the future owner of the MLA and our plans for 2025.
To ensure join-up, we have replaced JROC with a steering group of FCA and PSR seniors, that I chair with a dual hat on.
We will also deliver the outcomes from our cards market reviews. I mentioned our work on cross border fees earlier. We will also conclude our market review into scheme and processing fees for cards.
In our interim findings, published last May, we found that rises in scheme and processing fees meant that acquirers (and hence merchants) were paying over £200 million a year more in these fees. We have now concluded our further analysis and will soon be publishing our final report, and will set out what, if any, action we think we need to take.
Priority 2: Infrastructure reform
Payments Infrastructure which supports innovation and competition is critical to securing the outcomes we want to see for customers and business. Where we have seen infrastructure upgrades in other countries – such as PromptPay in Thailand these have been the keys to unlock major steps forward in payments.
Less progress has been made on infrastructure upgrades in recent years and the UK risks being left behind. To support sustainable innovation, our infrastructure must support the functionality needed for new and existing methods of payments such as account-to-account payments.
It is essential that our payment systems continue to modernise and change at pace to meet user needs, and that the markets they support continue to develop through competition and innovation, if the UK is to remain as a recognised leader in payments. Infrastructure must be future-proofed to be able to respond flexibly to developments and like emerging technologies such as CBDC, Stablecoin, RLN (DTL based) and cutting-edge AI tools.
The National Payments Vision is a key opportunity to drive forward progress on this essential agenda.
We will therefore drive forward, with the Bank of England, work to upgrade the Faster Payments system, and reforms of Pay.UK, as well as assess long term retail infrastructure needs.
Competition, innovation and growth
Building on work to date, we will also sharpen our focus on competition and innovation in payments systems, supporting economic growth and enabling the ecosystem of the future.
We will therefore further build our innovation capability, focussing on understanding where we can remove unnecessary barriers to payments innovation and helping to create the conditions for innovation in payment systems to thrive. We will build out our innovation capability by setting up a team to further our insights into potential barriers to payment systems innovation and to support industry by clarifying our expectations. We will work in close collaboration with the Bank of England, FCA and others – both domestically and internationally.
Your engagement will be key to this.
Collaboration with stakeholders and other regulators
But going beyond what will deliver, how we deliver is also important.
As the regulator for payment systems, we are at our best when we are engaging with parties across the payments ecosystem. This helps us to understand your perspectives, inform our decision-making and policy development, and helps to shape our agenda.
That does not mean we will always agree. Probably something has gone wrong if we do always agree! Our role is sometimes to challenge.
But we always listen and reflect on what you say.
I hope you will continue to see that throughout our engagement with us this year. It is really important to me that you do.
As I have mentioned earlier – and is visibly demonstrated through the first speeches today - another aspect of our approach is how we work with is particularly important that we simplify our role for stakeholders. We have established even closer working links with both the FCA – and my role is part of that – and with the Bank. With the FCA for example, we launched last year a call for evidence on digital wallets – and have worked closely on that issue.
While we own have our distinctive roles, we can maximise our impact where we work effectively together, working to our strengths and collaborating effectively.
That collaboration will be a key part of our agenda for 2025.
Concluding remarks
I am very optimistic about 2025. Following the National Payments Vision there is a real appetite for change across the payments ecosystem. There is an opportunity to be seized.
The PSR will do all that it can to seize that opportunity – delivery on our ambitious agenda – but collaborating with others to support competition and innovation.
I look forward to working with you as we collectively support a more competitive, innovative payments ecosystem.
Thank you.