Payments Strategy Forum Draft Strategy: Summary and Call for Input

15 Jul 2016 01:52 PM

To input into techUK's response and help shape its engagement with the PSR, please contact ruth.milligan@techuk.org.

The Payment Systems Forum (PSF) has released their draft strategy on the future of payment systems. The PSF was created by the Payments System Regulator (PSR) in March 2015 with a focus on formulating a strategy for the payments industry, bringing various different sectors together. It is composed of a wide range of stakeholders who bring expertise, with a balanced representation of providers and users.

The PSF are seeking comments on the proposals by 14 September 2016. techUK therefore need your views and comments so that we can submit a considered response.

The proposed strategy is heavily based on technology, requiring full engagement from the technology sector and there are great opportunities here for techUK members.

See here for the draft document in full.

Summary

This is a more radical strategy than might have been expected and offers a far-reaching re-organisation of the UK’s payment systems. It aims to open payment systems to new entrants, building on the Bank of Englandannouncement that it will open access to the real-time gross settlement system (RTGS) to non-bank PSPs, and interlink the banking architecture using aggregators and open APIs.

Main proposals:

• Bacs, the Cheque & Credit Clearing Company and Faster Payments (FPS) should be consolidated into one. (LINK and CHAPs to remain separate)
• The universal adoption of the international messaging standard ISO 20022
• The creation of a single simplified delivery mechanism to underpin a new layered payments architecture
• New direct services for consumers: ‘request to pay’ to allow structured payments; enhanced payment data and receipt of payment messages
• Actions to improve security and combat financial crime: agreed guidelines on identity, verification, authentication and risk assessment

Next steps

• The draft strategy is open to consultation until September 14th
• Over the summer a cost/benefit analysis will be conducted and consultation responses collated
• A final strategy document will be published in November 2016
• The PSR will announce plans for follow-through and implementation

Implications for techUK

The strategy is excellent news for tech. It will embed innovative technologies in a revamped payments structure. Its development will cut across a number of working groups:

• Open APIs: the strategy relies heavily on open APIs
• Payments: this Forum is proposing a new and simplified architecture for the UK payments market
• Digital banking: one of the main aims is to open the payments market to new entrants and to banks based on digital platforms
• Blockchain: it may well be that digital ledger technology will find applications within the proposed structure ( for interest see: finextra report)

Our timeline

• Please send any responses to the questions and initial comments on the strategy to ruth.milligan@techuk.org
• techUK will draft a response which will be sent out for further comment in August. These will be added to the draft.
• If adopted, the strategy will have long-term implications and will feature in further discussions within our working groups and events programme