What role does the Payment Systems Regulator (PSR) play to ensure that competition is effective at all levels of the payments chain?

The PSR have commenced a strategic review and are currently in a pre-consultation phase. 

More: PSR Future Strategy.

PSR’s Strategic Themes

The three themes of the PSR’s strategic review are:

• Theme 1 – Innovation and future payment methods.

• Theme 2 – Competition: What role does the PSR play to ensure that competition is effective at all levels of the payments chain? 

• Theme 3 – Choice and availability of payment methods: How does the PSR ensure that enough options are available to allow all people and businesses to make the payments they need and want to make?

The PSR want to hear your thoughts on what is most important for the future of payments. 

The PSR call to action is at: PSR Strategy.

Future of payments

Based on the PSR’s three themes, my initial thoughts on what is most important for the future of payments are:

1: That digital payment options are inclusive, equitable and accessible for all in society.

2: That the regulatory authorities agree a clear stagey for the managed decline in cash use – preserving cash for cash sake will, ultimately, only serve to leave some in society behind. This focus should include ensuring a sustainable cash distribution network for the period of the decline that isn’t unfairly cross subsidised by other payment methods. 

3: The review should explore how Central Bank Digital Currencies (CBDC’s) should fit within the payment mix both as a store of value and a method of payment.

4: The review should consider a payments eco-system that includes the opportunities presented by Open Banking (…Open Data … Open Everything) at the centre rather than a peripheral activity.

5: The review should seek to learn from missed opportunities of the past. For example the cheque replacement ‘strategy’ that, in reality, led to the reinvention of the cheque payment instrument through the development of an expensive imaging service against a backdrop of cheques not being accepted by many and volumes currently decreasing by 16% per annum (12 months to August 2020). 

6: Given that fraud is, unfortunately, prevalent in our society and payments are not immune to this ill, it is important that fraud mitigation initiatives are central to both the design of payment methods and any strategy. It is important that fraud protection initiatives consider both pre and post events of any payment journey.

7: As the UK moves towards a digital payment society it is important that citizens and companies can see clear benefits in new payment methods and chose to adopt them rather than being forced from one payment instrument to another.

8: Digital payments offer the opportunity for friction free and hassle free payments, it is important that when looking at payments we consider the full transaction journey rather than solely focus on the payments leg.

I’m sure these views will evolve and mature during the PSR’s strategy review process. 

Make sure that you are part of the debate and share your views – the PSR call to action is at: PSR Strategy.

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