Payment systems: the regulatory challenge


Hannah Nixon, PSR managing director, speech at the European Payments Regulation Conference on 3 December 2014 in London.

In the time it takes me to deliver this speech, more than 600,000 transactions will have been made in the UK using a payment system.

That’s about 40,000 for every minute I am on stage, or a little under 700 every second.

These are mind-boggling figures. They are a reminder that payment systems underpin virtually every financial transaction we make – be it buying a coffee using contactless or the high value transactions between City traders, and everything in between. They allow the UK to go about its daily business.

These figures are reminder of what is at stake and, for me, they will always be front of mind. 

Making sure we have reliable payment systems is imperative.

But it’s not just about reliability. The way people spend, move and manage their money is constantly changing. Payment systems need to keep pace with that. Payment systems need to keep innovating to provide new options for consumers, to make existing options better and easier to use, and to deliver wider system improvements for users.

Payment systems are a key part of the jigsaw that enables competition in retail banking and payment services more widely. So it’s about competition too.

This morning I will set out how the Payment Systems Regulator, working with industry, intends to drive the industry forward to ensure payment systems really do work for consumers and users.

But before I go into detail, I’d like to very quickly recap on the Payment Systems Regulator: who we are and what we’re here to do.

The Payment Systems Regulator is independent of the Financial Conduct Authority and we have our own Board.

We are a subsidiary of the FCA but have own objectives, powers and staff. Our focus is on the payments industry, and nothing else.

Our objectives underpin everything we do, drive what activities we undertake and inform how we prioritise out work. These objectives are:

  • to promote effective competition in the interest of service-users
  • to promote the development of innovation in the interest of service-users, and
  • to ensure that payment systems are operated and developed in a way that considers and promotes the interests of service-users

So we have a set of three mutually reinforcing objectives. 

The Treasury is currently consulting on which payment systems we will regulate and has proposed: Bacs, CHAPS, Cheque and Credit Clearing, Faster Payments, LINK, Mastercard, Northern Ireland Clearing and VISA. The final roster is expected to be confirmed soon.

Our vision is simple: we want the UK to have payment systems that work for consumers and users. We want world class payment systems operating in the best interests of service users and the wider UK economy.

That sounds simple. But achieving it will require an industry that:

  • is focussed on the needs of users and consumers
  • is innovative, and open to commercial as well as technological innovation
  • forges new partnerships to meet the challenges of the future, and
  • invests for the long term, but with a strong focus o