Genevieve Marjoribanks Westminster Business eForum speech – 19 May 2020


This is the text of the speech as drafted and may differ from the delivered version. This speech was delivered at the Westminster Business eForum: Next steps for digital payments in the UK - innovation, inclusion, security and regulation, on 19 May 2020. 

Good morning, and thank you for inviting me to speak here today. My name is Genevieve Marjoribanks and I’m Head of Policy at the Payment Systems Regulator.

So much has happened in the past few weeks that has led to widespread changes to our ways of working. Reflecting on the changes we’ve all embraced, and with this being my first digitally presented keynote, I want to talk about innovation in payments.

Whether protecting access to cash in isolated communities or working to prevent authorised push payment fraud, we are working to support the smooth functioning of the UK economy during one of its biggest ever challenges.

The Coronavirus pandemic is having a devastating effect on people all over the world. Now public bodies and industries have a responsibility to help them recover, and the financial sector is working to offer vital lifelines to consumers in need.

We’ve seen Barclays, NatWest, PayPoint and Sainsbury’s bank support LINK in a pledge to maintain free-to-use ATMs, despite a drop in demand caused by lockdown provisions.

We’ve seen the contactless limit raised, which makes it easier for people to pay for their shopping without having to handle cash or a point of sale terminal.

And we’ve seen innovations like Starling Bank’s Connected card, which allows account holders to give someone they trust a second debit card to buy groceries and other essentials on their behalf.

So, do we need more innovation in payments? For us at the PSR, the answer is decidedly yes! Not innovation just for the sake of innovation, but for the benefits that innovation brings for everyone. And that’s why one of the PSR’s three key objectives is to promote the development of and innovation in payment systems, including the infrastructures that are used for these systems. 

Alongside promoting effective competition and ensuring that payment systems are operated and developed in the interest of users, innovation is at the heart of everything we do. 

New Payments Architecture

So, with that said, I would first like to talk about one of the PSR’s key priorities: the New Payments Architecture, or NPA. 

The Blueprint for the NPA is the product of the Payments Strategy Forum, which involved thousands of hours of collaboration between industry stakeholders and users. The Blueprint outlined an ambitious plan for developing a more innovative and competitive interbank payments environment, underpinned by a resilient and sustainable infrastructure.

It's often said that the UK has consistently been at the forefront of innovation in payments, as shown by the introduction of Faster Payments, FPS, in 2008. At the time, FPS was one of the world’s first 24/7 immediate interbank payment systems. It has now been emulated, in one form or another, in over 50 countries. 

There have been many important developments in payments since the Forum published its strategy, some due to our own policies and actions. But by upgrading our interbank payments services to use the ISO20022 messaging standard, and enabling other enhancements contained in the Forum’s Blueprint, such as promoting innovation through the use of APIs, we will help maintain the UK’s position as a payments leader. 
To put it simply, the industry considers that NPA vision remains the way forward.

To achieve this, Pay.UK has the challenge of developing the NPA ecosystem. It must consult existing Bacs and FPS participants as well as future participants and users on the NPA scope and trade-offs which could arise in terms of competition, user benefits versus costs and implementation timelines. 

The complexity of this task has been further impacted by COVID-19. The medium to long term implications of Coronavirus, both for the payments industry and the wider economy, are not yet known. Nonetheless, there remains a strong commitment from the payments industry to realise the Forum’s vision of the NPA.

As part of our Infrastructure Market Review remedies published in 2017, we mandated that the FPS and Bacs systems would move to use central infrastructure that utilises the ISO20022 global messaging standard to bring increased interoperability, competition and richer data capabilities. This standard has been, or is being, adopted for payments in many places, such as the Single Euro Payments Area, the USA, my home country Australia, and in the new planned P27 pan-Nordic payments system to name just a few!

We believe that ISO20022 will help facilitate innovation and provide new opportunities for payment system participants and their users, including businesses, consumers and government. 

Furthermore, the work conducted over the last year or so by Pay.UK and the Bank of England to define a ‘Common Credit Message’ for domestic payments using the ISO20022 standard will provide for increased consistency and interoperability across the UK’s wholesale and retail payments systems. 

Industry determined that the NPA would deliver the move to ISO20022 for FPS and Bacs. So, Pay.UK needs to ensure that the design of the NPA and its governance arrangements are fit for purpose. Working closely with the Bank of England, the PSR will continue to focus on how the NPA design, development and build phases will meet our own objectives of promoting competition and innovation, and addressing the needs of system users, as well as being highly resilient. 

With that being said, we acknowledge that the NPA will signal a significant change in the payments industry that needs to be managed carefully, particularly in these difficult times. Proportionate decisions need to be made to get the right balance between realisation of benefits as soon as possible and transition costs and risks. From our perspective, it’s imperative that the PSR is an outward facing regulator, taking the views of stakeholders into consideration throughout this journey. 

An important part of our work is seeking the views of stakeho