Genevieve Marjoribanks, Head of Policy at the Payment Systems Regulator (PSR), delivered an insightful speech to the Westminster Business eForum this week on innovation in payments and the next steps for digital payments in the UK. One of the PSR’s three key objectives is to promote the development of and innovation in payment systems, including the infrastructures that are used for these systems.
The PSR will be issuing a draft policy statement later this year. Businesses which are active in the payments space or rely on Bacs or Faster Payments technology should consider feeding in views on the proposed changes and future regulatory approach.
The New Payments Architecture (NPA) is a key priority for the PSR. The aim is to achieve an ambitious Blueprint plan set out by the Payment Strategy Forum (Forum) of developing a more innovative and competitive interbank payments environment, underpinned by a resilient and sustainable infrastructure. To this end, Faster Payments and Bacs systems will be moved to use central infrastructure that uses the global ISO20022 messaging standard which has or will be adopted for payments in the Single Euro Payments Area (SEPA), USA and Australia. The PSR believes that ISO20022 will bring increased interoperability, competition and richer data capabilities.
Similarly, Pay.UK and the Bank of England (BoE) have been working to define a ‘Common Credit Message’ for domestic payments using the ISO20022 standard which will provide for increased consistency and interoperability across the UK’s wholesale and retail payments systems. By upgrading the UK’s interbank payments services to use the global ISO20022 messaging standard for, and enabling other enhancements contained in the Forum’s Blueprint, such as promoting innovation through the use of Application Programming Interfaces (APIs), the PSR believes the UK’s position as a payments leader will be maintained.
Developing the NPA ecosystem sits with Pay.UK which is consulting existing Bacs and Faster Payments participants, as well as future users. Implementation will require careful consideration, weighing up the potential innovation benefits to users versus costs and risks, particularly as both the industry and wider economy that it serves is facing a period of uncertainty given recent events such as Brexit and the COVID-19 outbreak.