Today marks the launch of the long-awaited Payment Systems Regulator (PSR). Spearheaded by Hannah Nixon, the new regulator indicates that momentum is focused on enabling small, alternative payments players in the financial services industry to challenge traditional models.
The PSR has announced three key objectives:
- The competition objective is to promote effective competition in the market for payment systems and the markets for services provided by payment systems in the interests of service-users or likely users of payment services.
- The innovation objective is to promote the development of, and innovation in, payment systems in the interests of service-users and likely users of payment services, with a view to improving the quality, efficiency, and economy of payment systems.
- The service-user objective is to ensure that payment systems are operated and developed in a way that takes account of, and promotes, the interests of service-users and likely users of payment services.
Emerging Payments Association board advisor Rich Wagner, CEO and founder Advanced Payment Solutions (APS), believes that while this move is a positive step for the industry, more needs to be done to support non-traditional payments companies to access essential infrastructure. He points out that the payments ecosystem is still extremely complex – numerous interdependencies continue to make gaining access to payments systems operators a challenge for non-clearing banks. Alternative financial services players need to be supported with access to the Bank of England for a settlement account and system integration with Vocalink (or other competitive system integrator) that can provide the robust resiliency that payment providers need with pricing structures that smaller players can afford.
Rich comments:“I’ve been in the alternative payments industry for over 10 years and the Payment Systems Regulator is the biggest groundswell of thinking, momentum, regulation and political pressure that I’ve ever witnessed in this space.
“Along with the Emerging Payments Association, I applaud the core objectives of boosting competition and innovation in the payments sector. However, if these objectives are to be more than empty promises, there are many inefficiencies that need to be addressed. For access to services such as Faster Payments and BACS (Bankers’ Automated Clearing Services), small and non-traditional banks and payment firms are still chained to the infrastructure of the UK’s major banks.
“If we are to cut the reins of the country’s biggest banks and allow new players to flourish on their own, the PSR needs to fight for direct access to clearing and settlement systems at a fair price for us alternative payments players. Financial equality across the whole ecosystem is required if we are to build a truly diverse industry that best responds to the needs of consumers and SMEs.”