PSR Outlines Critical Pathway with New Commitments for Payment Strategy Completion

Introduction

The Payment Systems Regulator (PSR) has outlined three core commitments to shape the final two years of its five-year strategy, aimed at advancing growth, innovation, and competition within the UK payments ecosystem. These commitments focus on embedding APP fraud reimbursement requirements, updating the Faster Payments Service (FPS) with the Bank of England, and fostering payment innovation by eliminating unnecessary barriers. In collaboration with the Financial Conduct Authority (FCA), the PSR is also addressing the evolution of open banking payments and commercial frameworks. By creating a new joint leadership role, the PSR and FCA aim to align their efforts and accelerate progress toward the UK’s National Payments Vision (NPV).

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Industry Comments

In comments, David Geale, managing director of the PSR, states that despite the strategy making “great progress” since first being launched in 2022, “we know there’s more to do”.

“By taking ambitious but realistic action, we can ensure payment systems remain competitive and innovative, delivering real benefits for users and supporting economic growth,” comments Geale. “Collaboration with others has been key to our success so far, and it will remain central to how we achieve our priorities.”

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FAQs

What is the primary goal of the PSR’s strategy?
The PSR’s strategy aims to foster growth, innovation, and competition within the UK payments landscape. This includes embedding APP fraud reimbursement requirements, enhancing Faster Payments infrastructure, and supporting payment innovation by removing barriers. Collaboration with the FCA ensures alignment with broader economic growth and the UK’s National Payments Vision.

What are Variable Recurring Payments (VRP), and why are they significant in the PSR’s strategy? 
Variable Recurring Payments (VRP) are a type of open banking payment where customers grant consent for businesses to make multiple payments of varying amounts without repeated authorization for each transaction. VRP simplifies processes like subscription management and dynamic billing, improving user convenience and enhancing business efficiency. The PSR’s focus on VRP in collaboration with the FCA is part of its first commitment to drive open banking’s commercial framework forward. This approach supports innovation and competition by offering a cost-effective, secure alternative to traditional card payments. By prioritizing VRP in phase one, the PSR aims to promote broader adoption of open banking solutions in the UK payments ecosystem.

How does the PSR plan to enhance payment innovation?
The PSR intends to boost payment innovation by removing unnecessary barriers that hinder progress in the sector. This includes fostering a supportive environment for emerging technologies while aligning with the UK Government’s economic growth initiatives and the National Payments Vision. Additionally, by collaborating with the FCA and creating a joint leadership role, the PSR aims to streamline its efforts, ensuring that regulatory frameworks encourage competition and facilitate new, innovative payment solutions.

Conclusion

The PSR’s three commitments signal a transformative approach to shaping the UK payments landscape. By embedding fraud reimbursement requirements, updating the Faster Payments Service, and addressing long-term retail infrastructure needs, the regulator ensures a more robust and secure ecosystem. Its emphasis on removing barriers to innovation aligns with the broader National Payments Vision, driving sustainable growth and competition. Collaborative efforts with the FCA and the creation of a joint leadership role underscore the strategic importance of harmonized regulatory oversight in fostering payment advancements. As the PSR enters the final phase of its five-year strategy, its actions will likely set new standards for innovation and resilience in the UK’s dynamic payments sector.