Payment Systems Regulator identifies key areas needing to be addressed
Issue 298 | 29 March 2022
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Payment Systems Regulator Annual Plan
The Payment Systems Regulator (PSR) has published its Annual Plan for 2022/23.
In publishing the annual plan the PSR have stated that, on the whole, the regulated payment systems work well. However, the PSR believe that the payments landscape is evolving and with this, there are issues that need to be addressed.
The areas that the PSR have identified as needing to be addressed include the prevalence of Authorised Push Payment (APP) fraud, risks to effective competition, and the need to support the payments sector to deliver new and improved services.
Not surprisingly the PSR also expect further challenges as global events impact the cost of living, which may affect what people need from payments to support their daily lives.
The PSR’s 2022/23 work programme focuses on improving outcomes for everyone who uses payment systems so they are fit for the future and their programme is guided by the four key priorities established in the PSR’s Strategy, that was launched earlier this year.
More:
PSRs Annual Plan for 2022/23.
PSR Factsheet which summarises the key projects.
Video from Chris Hemsley, Managing Director and Natalie Timan, Head of Strategy, Analysis and Monitoring at the PSR.
Debit and Credit Cards
The latest debit and credit card update from UK Finance.
Card transactions by UK cardholders both in the UK and overseas:
There were 2 billion debit card transactions in December 2021, 19 per cent more than in December 2020 and 15.2 per cent more than December 2019. The total spend of £63.5 billion was 0.5 per cent higher than December 2020 and 11.5 per cent higher than December 2019.
There were 349.7 million credit card transactions in December, 19.7 per cent more than in December 2020 and 1.9 per cent more than December 2019. The total spend of £17.3 billion was 17.9 per cent higher than December 2020 but 5.6 per cent lower than in December 2019.
Outstanding balances on credit card accounts have grown by 0.4 per cent over the twelve months to December.
Card transactions made in the UK by cardholders from both the UK and from overseas countries:
There were 2 billion debit and credit card transactions in the UK in December 2021, 19.6 per cent more than in December 2020 and 8.2 per cent more than December 2019. The total spend of £70.5 billion was 9.4 per cent higher than December 2020 and 10.2 per cent higher than December 2019.
Contactless payments accounted for 56 per cent of all credit card and 69 per cent of all debit card transactions.
There were 1.3 billion contactless card transactions in December, 40.3 per cent more than the 939 million in December 2020 and 76.5 per cent more than the 746 million in December 2019. The total value of contactless transactions was £20.2 billion in December, a 65.5 per cent increase on £12.2 billion in December 2020 and 172.5 per cent increase on £7.4 billion in December 2019.
The number of contactless credit card transactions was 57.5 per cent higher than December 2020 and 60.8 per cent higher than December 2019. The number of contactless debit card transactions was 37.9 per cent higher than December 2020 and 79.3 per cent higher than December 2019.
More: Payments Tracker.
Championing diversity in banking & payments - Where to next?
It was great to meet up with my friends over at SurePay today at the MoneyLIVE Summit. Over a conference ‘lunch in a box’ I took the opportunity to catch up with SurePay’s Louise Astbury and Bridget Meijer ahead of Kirsty Duncan, Women In Payments CEO’s, speech at MoneyLIVE.
Both Bridget and Louise were enthusiastic about Women in Payments being a central part of the 2022 MoneyLIVE agenda and were looking forward to Kirsty sharing a ‘roadmap to diversity for financial service organisations’ at the conference.
Louise and Bridget spent some time sharing their personal experiences at SurePay.
With employees from over 25 different countries and a very clear focus Louise and Bridget were enthusiastic about the importance SurePay placed on diversity - stating that it was clear that the positive culture was driven directly by their CEO and Co-Founder, David-Jan Janse.
At SurePay both Bridget and Louise have found that they don’t need to jump through unequal and biased hoops to achieve success but had experienced a culture that has enabled them to flourish.
With a strong corporate mission to combat fraud both Louise and Bridget feel that they are part of an organisation that treats everyone equally. With this ‘led from the top’ approach both Bridget and Louise think that they have found a company that shuns a hierarchal approach and offers the autonomy to ‘get on with the job’.
Both Louise and Bridget were very clear on the importance of Fintech role models particularly citing the encouragement and inspiration that both Becky Clements(Head of Industry Engagement at Pay.UK) and Anne Boden (CEO at Starling Bank) had been to them.
Ain't no IOUs when you pay DD
After over 50 years of faithful service we are well versed on the subject of the Bacs Direct Debit. With 4.6 billion DD’s processed each year they are the pre-eminent form of collecting regular payments efficiently and cost effectively from our bank accounts.
Our latest archive video is a 1980’s advert extolling the benefits of paying by Direct Debit:
Unpacking Variable Recurring Payments
In the latest Payments:Unpacked podcast we are joined by Sean Devaney from CGI. Sean helps us unpack the new Open Banking initiative called Variable Recurring Payments (or VRP's).
Unpack Variable Recurring Payments with Sean as he explains:
Are VRP's the end of Open Banking?
What is a VRP?
What do the banks need to do to introduce VRP's?
Will VRP's be chargeable?
You'll find the accompanying Payments:Unpacked blog on VRPs here: Sweeping possibilities with Variable Recurring Payments.
Can Direct Debits survive in the digital world?
Direct Debits (Bacs) and CHAPS payments have long served a useful purpose, largely due to their high transaction limit. But this dynamic changed with the introduction of FasterPayments and the recent change in transaction limit from £250,000 to £1 million. This measure was taken to reflect demand from corporate customers and help provide greater choice in the market for organisations wishing to make higher-value payments.
It’s a big milestone moment for Faster Payments, which provide quicker and safer payments than direct debits. However, the really interesting knock-on effect of this is the potential of Variable Recurring Payments (VRPs) to build on this. VRPs can essentially use the Faster Payments or Open Banking rails to pull variable amounts from a nominated bank. Now that the transaction limit has been increased, VRPs may now have the potential to replace or subsidise the use cases that have kept Bacs and CHAPs relevant.
Something interesting that hasn’t been talked about much is the coexistence of Faster Payments and VRPs – and what this means for direct debits. Surely the very premise of a three-day payment cycle is very out of touch with today’s payments needs.
Alex Reddish, MD, Tribe Payments
More: Are Faster Payments and VRPs the killer combination? by Alex Reddish, Tribe Payments.
EPI abandons plan for Visa and Mastercard rival as member banks quit
The European Payments Initiative has given up on its effort to build a rival to Mastercard and Visa in Europe after more than half its members left.
Initially backed by 31 major Eurozone banks and acquirers Worldline and Nets, the EPI set itself the goal of building a unified pan-European payment system, offering a card for consumers and merchants across Europe, a digital wallet and P2P payments.
Backed by the European Central Bank, the scheme was set to enter its operational phase this year, but by last November financing had become a concern for members, prompting a move to seek outside funding.
Now, 20 banks have pulled out, including all Spanish members as well as Germany's Commerzbank and DZ Bank. French lenders now dominate the group.
In a brief statement on the EPI site, the group says that the 13 remaining shareholders "remain convinced of the strategic value of a unified payment solution ready for commerce leveraging especially instant payments and want to go ahead".
Therefore, the EPI "is now adapting its scope and objectives to this new dimension". The project is now expected to ditch plans for a card scheme and will instead focus on the digital wallet.
"Very, very unlikely" big banks will have high-street branches
Anne Boden, CEO and founder of Starling, said that as banking continued to shift online, a post office or a “shared branch network” would deliver face-to-face services to those that wanted it.
More:
"Very, very unlikely" big banks will have high-street branches.
Podcast: On the Money - Marion King (Nat West) shares insights into fintechs and banks working together, in-person baking experiences vs automation and her dream bank for the future.
In brief
How the push to modernize Canada’s payment systems went off the rails.
House of Commons Library - The future of local banking services and access to cash.
Mastercard unveils a pair of open banking tools designed to improve predictability and transparency in digital account-to-account payments for merchants.
Lloyds partners ProjectPay to streamline construction sector payments.
CMA writes to Barclays and Lloyds over open banking API breaches.
And finally…
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