The UK payments industry is about to see its biggest change in a generation according to the Payment Systems Regulator (PSR).
The comments come as the Payments Strategy Forum, a body of experts set up by the PSR, published its Final Strategy for overhauling the current payment systems and putting the interests of those that use payments services centre stage.
The Forum, whose members include consumer groups, FinTechs and UK banks and building societies, has announced plans to introduce a series of initiatives over the next few years.
These initiatives are focused on collaborative innovation, where the industry needs to work together to tackle everything from the needs and protection of the end user, to helping organisations access payment systems more easily.
Among the initiatives published in its Strategy are the consolidation of three retail payment system operators, Bacs Payment Schemes, Cheque and Credit Clearing Company (C&CCC) and the Faster Payments Scheme (FPS).
The Forum also plans to create a new payments ‘architecture’ that is simpler, more accessible and more responsive to future user needs and innovation than the current model.
“The payments industry, including the technology, infrastructure, services offered to users, is going through the type of wholesale change that is only seen once in a generation,” says Hannah Nixon, Managing Director of the Payment Systems Regulator.
“When people look back at the evolution of UK payments industry, these will be the years that they will talk about and say, that’s when things changed.
There is still more work that needs to be done, but the way the Forum has approached this challenge over the past year is a testament to how, through teamwork and collaboration, much progress can be made.
There were some doubts when the Forum first launched as to whether competitive organisations could put their differences aside and develop a strategy to collaborate to deliver and better payments outcomes for consumers.”
As well as changes to the underlying payment systems and architecture, the Strategy also proposes the introduction of a key new safeguard, ‘Confirmation of Payee’, to help prevent financial fraud by allowing people to avoid sending payments to the wrong account, either by accident, or being tricked into doing so.
In addition, the proposed introduction of ‘Request to Pay’ will allow customers to authorise a regular payment, such as a utility bill or gym membership, before the company withdraws the money from their account.
“We don’t want the Forum to work in isolation. The Strategy is just one part of a wider shake-up of the UK payments industry, from supporting collaborative innovation to protecting people from fraud,” continues Nixon.
“The work of the Forum sits alongside work we are also doing to increase access to payments systems and restructuring the payments infrastructure.
When you put it all together the bigger picture is a UK payments industry that is vastly different to the one we saw when the PSR went live in April 2015. The work we are undertaking today will better serve consumers, businesses and the wider UK economy to ensure that the UK payments industry continues to be recognised as one of the most advanced and resilient in the world.”
Having completed the Final Strategy, the PSR is now keen to see the Payments Strategy Forum continue to build on the work it has done to date.