Industry Groans As UK Treasury Announces ’Future Of Payments Review’

As the UK Treasury launches a new review of retail payments, some are questioning the need for another government "fishing expedition" on the sector’s future.

This week, HM Treasury launched the Future of Payments Review 2023, a project that aims to explore the steps needed to deliver “world-leading retail payments” in the UK.

Alongside the review, it also published a call for input from UK firms, individuals and organisations, who are asked to share their thoughts on the future direction of retail payments.

The review will look at retail payments through a “consumer needs” lens, and aims to generate new recommendations for government, regulators and the industry.

The Treasury said the payments sector is a “major source” of the UK’s competitive growth and is “at the heart” of its dynamic financial services industry.

In the interests of continuing to support the sector in light of future innovation, the review is seen as necessary to understand the needs of consumers and businesses, increase investment and strengthen competition.

The Treasury will instruct the review to consider how the UK can “catalyse innovation” in payment services, “support interoperability” across digital money (though not CBDCs or stablecoins) and ensure “resilient and secure” payments.

It added that the review may also consider steps that build on the recommendations of the "Future of Open Banking" report by the Joint Regulatory Oversight Committee (JROC), published in April and expanded last week with the Payment Systems Regulator (PSR).

This may include gathering proposals on potential mechanisms to increase uptake of open banking solutions for retail account-to-account payments.

Also under consideration will be recommendations on the New Payments Architecture (NPA) from Pay.UK. a new system for interbank payments.

Industry input required

To help to inform the review, stakeholders are asked to provide views on the following three questions:

1. What are the most important consumer retail payment journeys both today and in the next five years?
2. For these journeys today, how does the UK consumer experience for individuals and businesses compare versus other leading countries?
3. Looking at the in-flight plans and initiatives across the payments landscape, how likely are they to deliver world-leading payment journeys for UK consumers?

Submissions to the review are open until September 1 and will be reviewed this autumn. The Treasury will provide the secretariat, while the review will be conducted on an independent basis.

The review will be chaired by Joe Garner, former CEO of HSBC UK and Nationwide, and will be published this autumn.

Industry reception

Among payments industry professionals, the review has so far been received with a sense of fatigue.

Geoffrey Barraclough, founder of the Business of Payments and former manager at EVO Payments, questioned the necessity of the review and said he found its aims unclear.

"Britain seems to be the world capital of reviews, and this one will add yet another report to the pile of documents sitting on the chancellor's desk,” he told VIXIO.

“This one doesn't even begin with a problem statement — although maybe that will be the final output of the project.”

Barraclough suggested that the government could make better use of its resources through a more targeted study on a single payments area, such as open banking.

“In place of this open-ended fishing expedition, I'd much rather see a speedy review into open banking payments,” he said.

“The UK had world leadership in this technology but is failing to deliver. Early investment risks being squandered unless regulators, banks and technology providers work together on a joined-up plan.”

Jack Wilson, global head of public policy at TrueLayer, a European open banking payments network, also said that while the Treasury's vision of "world-leading" retail payments is laudable, many similar reviews have already taken place and risk duplicating one another.

"It's crucial that the UK continues to deliver world-class payments for consumers, and major progress has been made on this front," he told VIXIO.

"But there is a lot already in the pipeline to ensure we stay ahead, as a result of the Payments Landscape Review (2021) the establishment of JROC (2022) and the review of the Payment Services Regulations (2023).

"Rather than another review, the Government should focus on orchestrating this change to maximise its potential."

Seeking clarity on open banking

The Treasury’s statement that the review “may” look at open banking payments caused confusion among all the sources that VIXIO spoke with.

Gary Prince, CEO of e-money institution The Payment Firm, said the Treasury had failed to make clear how the review would integrate with JROC's and the PSR's work on open banking, if at all. Working in "total isolation", he said, would not be beneficial.

Instead, Prince suggested that the government could just go straight to one of the major consultancy firms that produce regular industry trends reports, if its main goal is to gather information to inform policy.

“Personally, I am going to be getting on with delivering for the here and now, rather than speculating about the future,” he said.

“At the end of the day, the consumer just wants the goods and services they select, with a convenient means to pay for them.”