The Payment Systems Regulator has set out how it proposes to regulate the £75trn payment systems industry when it becomes fully operational in April.
Payment systems enable consumers to spend and transfer money. The Treasury is currently consulting on which systems will fall under the PSR’s remit, but has proposed the following: Bacs, CHAPS, Faster Payments, LINK, Cheque and Credit Clearing, Northern Ireland Cheque Clearing, MasterCard and Visa.
The PSR has three objectives: to promote competition, to promote innovation, and to ensure that payment systems are developed and operated in the interests of service-users.
In a consultation paper published today, the PSR proposes behavioural expectations for the industry and fairer and more open direct access to payment system operators.
It plans to launch two market reviews by April: one to assess the ownership and competitiveness of the current infrastructure and consider other possible infrastructure models and ownership structures, the other to look at how indirect access is provided.
Where firms fall short of its expectations, the PSR will have the power to carry out enforcement investigations and issue penalties and censures. It also has the power to force a firm to sell its interests in an operator.
In addition, the PSR will handle commercial disputes regarding access to payment systems or charges relating to services provided by them.
PSR managing director Hannah Nixon says: “Last year more than 21 billion financial transactions were made possible by payment systems. Everything from withdrawing money from a cash machine, paying a bill, making a payment by cheque, receiving your pension, and high value payments between the banks uses a payment system.
“It’s vital, therefore, 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.”