UK Payment Systems Regulator continues to prioritise competition and innovation whilst relaxing deadlines in response to COVID-19

http://www.linklaters.com/en/insights/blogs/fintechlinks/2020/april/payment-systems-regulator-continues-to-prioritise-competition
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The UK’s Payment Systems Regulator has published its annual plan for 2020/21. It continues to prioritise work on developing the New Payments Architecture, reviewing card-acquiring services and tackling authorised push payment scams, among other things. It is, however, mindful of the need to allow organisations to focus on essential services during the current crisis and is extending deadlines to support that.

2020/21 Annual Plan

The Payment Systems Regulator has published its annual plan and budget for 2020/21. It was initially drafted before the full effects of COVID-19 had become apparent. Since then, it has extended certain deadlines and flagged that other timelines in the report may need to be adjusted. Still, the plan provides a good indication of the PSR’s priorities, aside from supporting organisations in dealing with the current crisis.  

Key points of interest

A number of the PSR’s aims echo and develop the key priorities from the 2019/20 annual plan, including:

  • New Payments Architecture

    The PSR will continue its work in ensuring the New Payments Architecture delivers a resilient and beneficial way of making digital payments.

    The New Payments Architecture is intended to replace the UK’s retail interbank payment systems (i.e. Bacs, Faster Payments and potentially Cheque and Credit). This new clearing and settlement system will be a single platform, operated by Pay.UK. Depending on how it is designed, it could fundamentally change the mechanics of how UK retail payments are made. 

    Pay.UK is currently seeking to procure a supplier to build and operate the central infrastructure. The PSR is supervising this process and wants to ensure the new system allows new and existing payment service providers to compete effectively to develop innovative services that benefit consumers. 

    In January, the PSR issued a call for input on issues that could affect competition and innovation in the NPA. In the current circumstances, the PSR is mindful of the need to allow organisations to focus on essential services and has thus pushed back the deadline for responses until 21 April 2020.

  • Card-acquiring services

    The PSR is aiming to finalise its market review in relation to card-acquiring services.

    The PSR has been conducting a review into the supply of card-acquiring services over the last couple of years, and has published various consultation documents in the process. Card-acquiring services are services which merchants buy in order to accept card payments. The market review is in response to concerns that the supply of these services has not been working well for merchants. The PSR has been planning to publish and consult on its interim report in June 2020, with a view to publishing its final report later in the year. The proposed timeline may again be impacted by COVID-19.

  • Authorised push payment scams

    The PSR will continue its efforts to reduce the risks of authorised push payment (APP) scams.

    In order to tackle the growing problem of APP scams, the PSR coordinated the launch, last May, of a voluntary industry code for reimbursing victims. Subsequently, it compelled the six biggest banking groups to comply with one of the standards in the code – the “Confirmation of Payee” service. This requires banks to check the name on a payee’s account as well as the sort code and account number. The deadline for full compliance was originally set for the end of March, but this has again been extended to enable banks to respond to current needs. The PSR will continue its work to encourage more payment service providers to follow the industry code.

Other lines of work 

The PSR plan also highlights its focus on the following areas:

  • Access to cash: ensuring that people can continue to access and use cash. This will include overseeing LINK’s management of ATMs as well as developing longer term plans with the FCA and Bank of England for protecting access to cash and making digital payments work for more people. 
  • Competition: ensuring that payment systems and markets are more competitive and/or deliver better outcomes for users. This includes tackling anti-competitive conduct, so that there is a credible deterrence against such behaviour. The PSR will continue to progress and launch new investigations to support this.
  • Intelligence: ensuring the PSR has a deep understanding of the sector to inform decision-making and strategic planning. This will involve measures to improve the collation and analysis of market data.
  • Strategy: ensuring stakeholders have a clear understanding of the PSR’s longer term focus. For the first time, it plans to consult on, and publish, a long-term strategy paper.
  • Powers and procedures: ensuring stakeholders understand the PSR’s decision-making and procedures. To this end, it aims to publish its final Powers and Procedures Guidance.
What is the Payment Systems Regulator?

The PSR regulates payment systems and the participants in those systems, e.g. banks and other payment service providers, among others. It aims to promote competition, innovation and the interests of stakeholders in the sector.

http://www.linklaters.com/en/insights/blogs/fintechlinks/2020/april/payment-systems-regulator-continues-to-prioritise-competition