The future of payment systems – and the PSR


Speech by PSR managing director Hannah Nixon at the British Bankers’ Association: Future of Payments conference, 24 September 2014.

A little over two months ago, I joined the PSR as managing director. I’ve entered the payments world – and indeed the PSR – at a really exciting time as we prepare for our full operational launch on 1 April next year.

More importantly, the industry is potentially on the brink of a revolution, driven and enabled by technological change. As the BBA’s recent report ‘In your hands’ highlights, the way people spend, move and manage their money is changing. And payment systems are at the forefront of this. Mobile banking, Paym, contactless, and cheque imaging are recent examples of just what the industry is capable of.

The payments landscape is transforming. As we all know, payments are essential to the smooth running of the economy – and they’re complex. Some £76 trillion flows through them every year, touching everybody and every part of the economy. We estimate that we will regulate processes for over 21 billion transactions each year.

So the stakes are high. It’s important we get our regulatory role right and that industry plays its full part in delivering for users and consumers. If we're to do that, it's vital that we understand the views and concerns of all stakeholders.

I’m aware that many of you and your organisations have engaged with the PSR over the last six months or so. That engagement has been enormously helpful to us. So thank you. And please do stay engaged as we develop and implement our regulatory framework.

What I want to do today is to introduce you to the PSR - and to update you on where we have got to, outline our plans for the immediate future and give you a flavour of the type of regulator we will be.

Government and regulatory interest in the payments industry is nothing new. The most recent round of interest probably goes back to the Cruikshank Report in 2000. Since then we have had an OFT market study, establishment of a Payment Systems Task Force, and consideration by the Independent Commission on Banking.

But the advent of the PSR marks a sea change, as payment systems will be directly regulated for the first time.

On the question of who we will regulate – in a nutshell, we will regulate those schemes deemed by Treasury to be systemically important to the economy. Treasury will consult shortly on the parties it intends to designate – but we expect it to be the big UK interbank schemes and the major credit card schemes operating in the UK.

Treasury intends to make its decision on designation before our powers come into force on 1 April next year.

But what are our objectives? What is the PSR trying to achieve?

We have three very clear statutory duties, which are set out in the Banking Reform Bill (2013):

  • to promote effective competition in payment systems and the services they provide
  • to promote innovation in payment systems
  • to ensure that payment systems are operated and developed in a way that takes account of, and promotes, the interests of service users

Importantly, the first two are drivers of bet