This is the text of the panel introduction as drafted and may differ from the delivered version. This introduction was delivered by our Head of Strategy and Intelligence, Natalie Timan, on 9 May at the PSR Annual Plan event 2023.
Good morning, everyone.
I’m Natalie Timan, Head of Strategy and Intelligence at the PSR.
This morning’s first panel session is focused on what’s on the horizon for payments, and I’ll be joined by Tony Craddock from the Payments Association and Nilixia Devlukia from the Open Finance Association.
But, before we start that conversation, I wanted to take the opportunity to talk about the horizon scanning work we’ve been doing at the PSR.
The PSR has a vision of what good outcomes for payments users looks like and our Strategy sets out where we want payments to be in the future.
It is a future where users have access to payment services that meet their needs, there is effective competition between payment systems and those payment systems are efficient and commercially sustainable. This also means that we need to make sure that there are sufficient protections in place and that incentives are in the right places.
Our strategy is clear. And our annual plan sets out our projects. However, the world is changing around us and so we need to understand what is happening in payments and beyond and the impact this has on both our current work and the new projects that we take on. Understanding how payments is evolving is key to realising our vision of the future.
Our horizon scanning work is therefore vital to achieving our ambition.
Just in the last few years, we’ve seen a lot of changes in payments. As consumers, the way we make payments has changed.
We have moved towards making more digital payments and away from cash. For some of us, our phones are replacing our purses and wallets.
Behind the scenes, the technologies supporting payments are developing at an extraordinary pace, with the growth in API based access, for example, and the emergence of distributed ledger as a mainstream payment technology.
Where and how we make payments has changed too and in areas like digital wallets, digital currencies and programmable payments, we are expecting to see even more change. There is a credible future where virtual environments become a significant place to make payments.
For merchants, the way that take payments is also changing. You increasingly see card payment terminals allowing market stalls and sole traders to take card payments.
We have also seen this change online. There are more – and more convenient – ways to accepted card payments online. And there’s still plenty of opportunity to provide enhanced competition and choice for merchants – benefitting all of us as consumers – including through our work unlocking account-to-account payments.
Just these examples show that, specifically in the areas of payment services, there has been a lot of innovation. This makes it easier for us all as consumers and easier for businesses. Where there could be more innovation is in the systems themselves – where issues such as infrastructure renewal, standards and coordination become particularly important.
It’s why our role as regulator can be essential. We can use regulation to address these challenges, and to support innovation and competition in payments. To drive those other, wider changes in how we make and receive payments.
So, what does that mean we can expect?
I’ve already mentioned our work in driving account-to-account transactions as a new, reliable way of making retail purchases.
We’re seeing more people making payments using Open Banking and we’re expecting that usage to continue to grow. And the improvements being made through the NPA will enable more innovation, access, choice and hopefully competition.
And there are new technologies out there as well, that all have the potential to push the boundaries of what we understand payments should look and feel like.
These opportunities aren’t limited to what we might think of as the traditional payments ecosystem – think Web 3.0 or the metaverse which could affect where we make payments.
We’re also watching carefully how others outside of payments might move into the space, such as Twitter or TikTok.
And then there are those organisations which are already moving in the payments space whose influence here could grow – think Apple or Google.
So of course, these all present exciting opportunities. Now, while there are opportunities, we can expect risks too. It’s why we’re watching developments carefully.
We want there to be a thriving, competitive payments ecosystem that is delivering systems, products and services that meet a need.
By keeping an eye on the future, it means we can be ready to adapt, where we can, any regulatory approaches to support a dynamic, competitive and innovative market.
Our work in this space is key because by knowing what might be, we can identify and work with all stakeholders to understand the potential challenges and make sure there are no barriers to innovation, or at least reduce them as much as possible.