Payments industry and regulatory round up
Issue 211 | 30 November 2021
Welcome to issue 211 of Payments:Unpacked, this premium subscriber edition provides a fortnightly round-up of payment related developments at Pay.UK, the Payment Systems Regulator, the Bank of England, HM Treasury, the FCA and the Open Banking Implementation Entity.
Period covered: 4 to 30 November 2021.
Pay.UK
The Next Generation Standard for UK Retail Payments
The migration of the payments industry to the ISO 20022 standard, not just within the UK but globally, will have a profound impact on the data carrying capability of payment systems. Whilst the fundamentals of a robust and resilient clearing and settlement mechanism will remain, the ISO 20022 standard will take the exchange of data to new heights; richer information through an increased quality and quantity of data, will lead to improved benefits for the entire payments’ ecosystem and beyond; from direct participants (e.g. banks) to end users (e.g. businesses).
At the end of last year, the Standards Authority within Pay.UK published the conclusions to its earlier consultation “The Next Generation Standard for UK Retail Payments”. Pay.UK received a substantial number of responses from a wide range of entities and individuals – from participants to solution providers to end users – all with a strong interest in the migration to ISO 20022 and the benefits it will provide. Pay.UK received strong industry support for their direction as a standards setting body, their role in the ecosystem, their partnership with the Bank of England as operator of CHAPS and RTGS (“the Bank”), and an overarching commitment to work with Pay.UK as they move forward.
The article also covers:
For those who will be implementing ISO 20022 for their institutions…
Clarity on our standards technical collateral and design approach.
Continued alignment with the Bank of England.
Timelines required for implementation.
For those who will be innovating and providing solutions to their clients…
Developing examples and the approach to Remittance Data.
Collaborating on Whitepapers & Proofs of Concept with other industry bodies
Ensuring appropriate interoperability
For those who are businesses, charities and other end users…
Using standards to help mitigate Authorised Push Payment (APP) Fraud
Facilitating and streamlining tax administration for HMRC and tax payers
Developing our approach to the Building Blocks within the Standard
More: The Next Generation Standard for UK Retail Payments.
Second standards technical collateral release to be published
Pay.UK plan to release updated and new “draft” Implementation Guidelines and Schemas (in machine readable form, XSD) at the start of December. These will additionally support payment returns, payment status', payment authorisations, multiday payments & recalls and payments initiated by Direct Non-Clearing Participants.
These publications will allow industry to review and feedback to us questions or comments relating to usability, content and the types of collateral available.
As part of the ongoing due diligence process Pay.UK will be seeking feedback from their Community of Developers group and the Industry Standards Coordination Committee on the collateral that we produce. Pay.UK also continue to work closely with the Bank of England to ensure alignment between the retail and high-value payment systems where possible.
More: Second standards technical collateral release to be published.
UK Payments in numbers
Board Minutes
8 September 2021: Covering: funding approved ‘…to assist with work regarding direct debit error recoveries in Faster Payments’, (BoE) FMID Update on Pay.UK’s Priorities, update on progress delivering the New Payments Architecture, PFMI self assurance, 2022 budget, allocation of costs as Bacs no longer part of the initial NPA scope and impact of NPA and a minute that reads ‘…noted that some participants were concerned that with the focus on Faster Payments, the Bacs product would not be properly maintained and updated.’
10 September 2021: Strategy focussed meeting including comments such as: ‘…The statements also reflected a more commercial mindset and the desire to move from being a services provider to a platform leader’, ‘there will be conflicts between elements of the ecosystem that would require a consistent approach to resolve’, ‘that there was more than one type of end user and that there would be occasions when the needs of end users would be in conflict with those of participants’ and ‘that the process had not
been straightforward but that the outcome now gave the business a clear sense of direction.’
Payment Systems Regulator
PSR statement on card scheme fees
As we’ve said previously, there are real questions about how well the cards market is working. We've highlighted our concerns around scheme fees before, and recently published analysis that shows how they have risen (Card Acquiring Market Review Final Report – see chapter 5). We note the action Amazon is taking and are engaging with all relevant parties to understand the impact on people and businesses.
Our existing work on interbank payments (sometimes called ‘pay by bank’ or ‘bank to bank’ payments) is an important way to provide alternative payments in the future. However, as part of our ongoing work in this area, we have been considering our next steps. Following our recently published market review into card acquiring, at a routine Board meeting today we approved an additional phase of work that will look into how well this market is working, including the issue of increasing card fees. If necessary, we will intervene to address any issues we identify. We will provide more information on this work with our final Strategy, which will be published in the new year.
PSR, 17/11/21
PSR announces plans to stop APP scams
The Payment Systems Regulator has set out its latest plans to fight fraud and protect victims of APP scams.
Every year thousands of individuals and businesses fall victim to Authorised Push Payment (APP) scams – where they are tricked into sending money to an account controlled by a fraudster. There are also a significant number of accidentally misdirected payments that are not recovered. The latest figures show that in the first half of 2021, £355 million was lost to APP scams, overtaking card fraud losses.
The PSR expects to see more action from financial institutions to stop these scams from happening and to better protect people if they do fall victim. In its latest consultation, the PSR sets out the next steps.
The PSR state that more action must be taken by the financial sector, and by those across the digital ecosystem, including social media firms, to prevent scams and to protect the victims of crime. The PSR’s latest consultation sets out the regulator’s proposals including:
Publication of fraud data by banks: Banks and building societies in the 12 largest banking groups in Great Britain and two largest banks in Northern Ireland outside those banking groups must publish data on their performance in relation to APP scams, on reimbursement levels for victims, and which banks and building societies’ accounts are being used to receive the fraudulent funds;
Improve scam prevention: Industry will improve intelligence sharing to enhance detection and prevention of APP scams.
Reimbursing victims: Developing how best to make reimbursement mandatory to victims of APP scams once legislative changes have been made.
The PSR intends to require the publication of fraud data and is keen to work with firms to identify the most appropriate ways this will be collected before the requirement comes into effect.
In further steps announced by HM Treasury, legislative changes will be made by the Government to provide for mandatory reimbursement for scam victims.
Push payment fraud is posing an escalating risk to UK customers, with increasingly sophisticated scams that can be detrimental to people’s lives. The Government’s position is that liability and reimbursement requirements on firms need to be clear so that customers are suitably protected. It is welcome that the Payment Systems Regulator is consulting on measures to that end, and to help prevent these scams from happening in the first place. The Government will also legislate to address any barriers to regulatory action at the earliest opportunity.
John Glen, Economic Secretary to the Treasury
and Chris Hemsley, the PSR’s Managing Director said:
The growing problem of APP scams has seen people lose devastating amounts of money. More needs to be done and while voluntary industry measures have helped some victims, there are many institutions which have yet to step up to the mark and protect people properly – including social media firms.
“The range of steps we plan to take will show people which banks and building societies are likely to respond to frauds in the right way and will put the onus on financial institutions to get better at detecting and preventing scams.
“We are also setting out the way to make reimbursement mandatory for those blameless victims so that, when the law is changed, we are ready to act as quickly as possible to get protections to the people who need them.
The PSR’s latest consultation is open until 14 January 2022 and the regulator is keen to hear the views of anyone who has feedback on its proposals.
More:
Keep reading with a 7-day free trial
Subscribe to Payments:Unpacked to keep reading this post and get 7 days of free access to the full post archives.