Payment Systems Regulator reports “strong progress”

Review reveals steps taken in fight against APP fraud, advancing open banking and reviewing card fees against background of new technology and market innovation
 

The Payment Systems Regulator (PSR) has set out commitments for the next two years following a mid-term review of its five-year strategy. The PSR said that these commitments were “an impactful programme of delivery as the regulator seeks to achieve world-leading payment systems where competition and innovation deliver secure, accessible, and value-for-money services that meet the needs of people and businesses”.

“This review reflects extensive engagement with stakeholders, trends in payments – both at home and abroad, the government’s growth mission, and the impact of the National Payments Vision (NPV),” the body said. 

Delivering impact

Following the mid-term review, the PSR said it would focus on three core commitments within its remit for the remainder of the five-year strategy term:

• Complete the important work under way – protecting consumers and supporting competition. The PSR will fully embed its APP fraud reimbursement requirements, including commissioning an independent review, and deliver the outcomes from its card market reviews. The PSR will work closely with the FCA to enable it to take forward work on the overall framework for commercial Open Banking payments, focusing on the initial phase of Variable Recurring Payments, which offers consumers more choice and control when making payments.
   
• Drive forward, with the Bank of England, work to upgrade the Faster Payments system, and reform of Pay.UK, as well as assess long term retail infrastructure needs. This is critical to providing a sound foundation for future innovation and competition in payments.
   
• Sharpen its focus on competition and innovation in payments systems, supporting economic growth and enabling the ecosystem of the future. The PSR will further build its innovation capability, focussing on removing unnecessary barriers to payments innovation and helping to create the conditions for innovation in payment systems to thrive. The PSR will ensure that as it takes action, it considers how that supports economic growth and will play its role in supporting the government’s growth mission.

 Collaboration with others has been key to our success so far, and it will remain central to how we achieve our priorities  

More to do

David Geale, the PSR’s managing director, said: “We’ve made great progress – especially in protecting consumers through our world-leading approach to APP fraud. But we know there’s more to do.

"By taking ambitious but realistic action, we can ensure payment systems remain competitive and innovative, delivering real benefits for users and supporting economic growth. Collaboration with others has been key to our success so far, and it will remain central to how we achieve our priorities. We look forward to working with other regulators and stakeholders across the payments ecosystem to deliver this updated strategy.”

Collaboration

While the PSR’s remit focuses on payment systems, it works closely with industry participants, consumers, businesses, and trade bodies to gather insights and deliver change across the payments ecosystem.

“The PSR will work even more closely with the FCA, Bank of England and other authorities to deliver positive outcomes,” it reported.

Open banking developments

The PSR has also set out its next steps for open banking, which will include a new independent company to drive forward variable recurring payments. The PSR said there was significant progress in developing open banking in 2024, thanks to voluntary funding from 20 leading firms. This included:

• fraud analysis capabilities
• consumer protections
• new open banking services such as variable recurring payments (which will give consumers greater sight and control over their regular payments).

“It is clear from the National Payments Vision, and the government’s growth agenda, that continued success in this area is critical for the UK,” it reported. “The PSR and the FCA are fully supportive and are ready to meet this challenge – as set out in Nikhil Rathi’s (CEO of the FCA) letter to the Prime Minister and the PSR’s recent strategy update.”

The PSR was formed in 2022 as a result of the Financial Services (Banking Reform) Act 2013. It is a subsidiary of the Financial Conduct Authority with a goal to promote competition and innovation and to ensure payments systems are operated and developed in the interests of the people and businesses that use them.

The designated payment systems over which it has regulatory powers include: BACS, CHAPS, Cheque & Credit, FPS, LINK, Mastercard, Visa Europe and the Sterling Fnality Payment System.

About the author

Philip Smith is the editor of The Treasurer