Collaboration and innovation are at the heart of how the new Payment Systems Regulator (PSR) plans to regulate the UK’s £75 trillion payments industry.
Among the PSR’s core proposals is the introduction of a Payments Strategy Forum with broad service-user representation. It also proposes that ownership, control and governance of payment systems will be opened up to give all service users a voice when decisions are made, not just those that own the systems, which is typically the major banks.
Furthermore, the publishing of board minutes and votes would be mandatory, while payment system operators would also need to identify and address conflicts of interest and report back to the PSR on how they have improved these areas.
The PSR, which will not become fully operational until 1 April 2015, has three objectives: to promote competition, to encourage innovation, and to ensure that payment systems are developed and operated in the interests of service users.
Its package of reform proposals will be open for consultation until 12 January 2015.
Payment systems enable people to spend and transfer money. Commenting on the proposals, Hannah Nixon, MD of the PSR, said: “It’s vital for the UK to have world-class payment systems. The systems we have today have been developed incrementally over time by the major banks. So while they are relatively resilient, they are often treated as back-office functions. Competition is limited, decision-making opaque, and this is stifling innovation. This has to change.”
Maurice Cleaves, interim chief executive of the Payments Council, which is the body responsible for ensuring that the UK’s payment services work, commented: “We welcome the consultation and look forward to taking part in the process. We are already committed as an industry to maintaining our world-class payments systems for customers, while ensuring new providers enjoy a level playing field.”
The PSR will regulate the largest and most important payment systems, which, if they were to fail or be disrupted, would cause serious consequences to their users. HM Treasury is currently consulting which systems to include and has proposed the main interbank payment systems: Bacs, CHAPS, Faster Payments, LINK, Cheque and Credit Clearing, Northern Ireland Cheque Clearing, and the two largest card systems in the UK: MasterCard and Visa.