Improving access to payment systems and making the governance of payment system operators more inclusive and transparent are key priorities for the PSR. This follows concerns that access requirements were not clear or fair and that payment systems were being operated for the benefit of the major banks.
Having access to a payment system is essential for anybody that wants to provide banking or payment services, and is a key enabler of effective competition.
While further improvement is needed across the board, the report does show encouraging progress, including:
- clearer and fairer requirements for direct access
- faster times for securing access - one operator has said it is significantly reducing its ‘onboarding’ time for new direct members
- greater transparency on how boards of payment system operators make decisions
- better representation of the payment systems users’ views during decision making
Hannah Nixon, the PSR’s Managing Director, said:
“Having access to a payment system is an essential factor in being able to challenge the high street banking hierarchy and offer more choice for consumers. Yet historically the odds have been stacked against those trying to gain a foothold.
“The good news is that the changes we have made on direct access are helping level the playing field. Barriers to access are being removed and this is clearing the way for new banks and payment service providers. The industry’s mind-set is starting to change, which is also helping deliver results. In short, the payments sector is becoming more competitive.
“I’m encouraged by progress so far, but these are early days and there must be no let-up. Operators need to keep access and governance at the top of their agendas and continue to make improvements.”
The changes made by operators are driven by new requirements the PSR introduced. The requirements, called ‘directions’, are in turn driven by our statutory objectives of promoting competition, innovation and the interests of the people and businesses that use payment systems.
All operators have now publicly disclosed their access requirements and made the information provided clearer and easier to use. Previously this information varied in quality, or was sometimes unjustifiably hidden behind non-disclosure agreements.
The report shows that we are also seeing strong demand for direct access.
- Payment service providers that want to secure direct access have made more than 50 expressions of interest.
- Eight have taken it a stage further and entered into formal discussions.
It can take up to 18 months to join a payment system. One operator, Faster Payments Scheme Ltd, can now potentially onboard a new direct access member in as little as nine months, providing the new joiner has completed the necessary documentation and its IT systems are ready to go.
We expect the other operators to look at this example and reduce the time it takes to join their schemes.
Encouragingly, minutes and votes of Boards are now being published which is boosting transparency. Operators have also made sure there are no conflicts of interest at board level – specifically that board members are not also directors of major infrastructure providers.
While the report shows that operators are starting to represent the views of their users in the decision making process, we need to see more progress in this area. We will seek evidence every year to check that the interests of users are truly being put at the heart of each operator’s business.
We have been encouraged at what has been achieved by operators so far, but there are areas they must continue to focus on:
- We believe the onboarding process can be made faster and easier still.
- We think there is more operators can do to enable access for smaller banks and payment service providers that are not banks.
- Critically, operators must never lose sight of the payment service providers, businesses and people that use and rely on payment systems, and must make sure they consider and represent their views in their decision making.
We will monitor developments closely during 2016 and will publish an annual report showing progress made on access and governance. If we do not see continued good progress being made then we will consider taking further action.
We are also conducting an in depth market review on indirect access. We will be publishing an interim report in the first quarter of next year.