This is the text of the speech as drafted and may differ from the delivered version. This speech was delivered by our Head of Policy, Genevieve Marjoribanks, at the Westminster eForum Policy Conference on 10 June 2021.
Good morning and thank you for asking me to speak to you today about the regulatory priorities for the UK payment sector. I am Genevieve Marjoribanks and I’m the Head of Policy at the Payment Systems Regulator.
I know that, already this morning, you’ll have heard about the evolving landscape for digital payments, along with the future of cash and the useful panel discussion around competition and choice.
All these things are very closely interlinked – they aren’t mutually exclusive – and they all rely on each other. But taking them as a whole, what does that mean for the regulatory priorities for the UK’s payment sector?
Payments is at the forefront of change as we move even more online and as we continue to see innovative payments enter the market like stablecoins. The PSR has been monitoring changes to use of cash and the development of digital currencies closely. We’ve been working with our financial authority colleagues to collect evidence to help us consider what regulatory and infrastructure changes might be needed to: maintain access to cash where it’s needed, and to make digital a more accessible payment method.
Sitting at home and thinking about it from a personal viewpoint, I can see that we are going to have a considerable amount of choice when it comes to making payments in the future. And that is something we should embrace. There should, rightly, be the choice – we should welcome new alternatives as well as keeping safe the things we know which work for us.
So, with all these exciting developments happening, what does that mean for regulation?
Well, it means regulation needs to be fit for purpose. We need to work with industry to tackle the payments challenges of today and of the future.
Payment systems fared well during the depths of the crisis as industry and regulators worked together. As we move forward, we need to continually look at our framework to see if it needs to change.
Our ongoing work has adapted to changes in circumstances. Our biggest challenge during the pandemic was ensuring people could still access to cash as and when they needed it. We took clear steps, including directing LINK to make sure cash remained available.
Initiatives and protections that were implemented to stop fraud helped the financial institutions who introduced services like Confirmation of Payee. But unfortunately, we saw the number of APP scams increase as a result of changing behaviours of the criminals. We are taking steps to ensure there’s a robust framework in place to offer protection users of payment systems because it is the right thing to do to make sure everyone is able to make payments securely and safely.
But first, I’ll talk about our work for the future, more broadly, as a regulator.
As a regulator, we’ve been around since 2015. The payments landscape has changed so much in just that short space of time. For example, there have been major changes to the ownership and operation of payment infrastructure, and access has been opened up to so many more players which has in turn led to new and innovative payment services.
That’s a success. So, what of the future?
Well, payments are an essential part of daily life and a vital element of the economy. Put simply, how we use them affects - and sometimes dictates - how we live our lives.
We want to make sure that everyone has a fair choice about how to make and receive payments; that our payment systems are fit for the future; and that we can all use them with confidence and in the knowledge that we are protected.
Our strategy is about making that happen and also part of making sure we are fit for purpose. We carried out a lot of engagement last year and we had some really insightful conversations with many of you to help shape what the strategy could look like.
Today, we launched our proposed strategy. This strategy reflects where payment markets and systems are supporting competition and innovation and improving outcomes for everyone, but also highlights that there are areas where more work is needed.
As the use of cash and cheques falls, the future of retail payments is increasingly about digital debit payments. So, there is an increasing need to focus on competition between different payment systems.
The future looks more likely to be characterised by a small number of payment systems supporting a wider range of different payment services. And to promote competition for these payment services, we want to unlock the potential of the existing interbank systems, so that they present a viable alternative to cards for retail payments.
To do this, we want to see Pay.UK deliver against a broader role, actively improving the rules governing interbank payments so that interbank payments are as flexible and responsive to user needs as possible.
Our strategy also signals we may need to use our powers to protect consumers while we work towards long term solutions and that we may need to intervene robustly if long term structural change does not ultimately deliver the outcomes for users that we want.
We have identified four strategic outcomes that we want to help bring about in the next five years. These flow into four strategic priorities that provide a framework for meeting this ambition. Those priorities are:
Ensure users have continued access to the payment services they rely upon and support effective choice of alternative payment options.
Ensure users are sufficiently protected when using the UK's payment systems, now and in the future.
Promote competition in markets and protect users where that competition is not sufficient, including a) between payment systems within the UK and b) in the markets supported by them.
Ensure the renewal and future governance of the UK's interbank payment systems supports innovation and competition in payments.
Each of us here today knows that it’s now possible for many of us to make almost every payment we need in an average day using just a card or a smartphone. But payments and payment systems must work well for everybody.