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Payment system operator Pay.UK has unveiled a package of proposed reforms to the organisational framework for interbank payments, urging “radical” change to prevent the UK falling behind on infrastructure and innovation.
The proposals come as the UK embarks on implementing its National Payments Vision, which was set out by the government last year, and accompanying changes to regulatory structures.
Pay.UK said the time was right to “embed the organisation further within the payments community, whilst providing safeguards for the public interest outcomes of financial stability, access, and competition in the market.”
The UK’s current payments framework has been in place for nearly a decade, and Pay.UK has hailed achievements such as delivering improvements in resilience and fraud prevention.
However, it acknowledges limitations in regards to infrastructure upgrades, which is notable considering slow and limited progress on the New Payments Architecture.
According to the provider, the current framework has failed to enable “the swift and efficient building of new infrastructure and related opportunities to improve payments, leading to the UK falling behind other countries”.
“There are many reasons for this, including lack of consensus behind a clear vision and a prescriptive and overly engineered regulatory approach,” the body says.
“Pay.UK, operating within this challenging environment, recognises that it did not get everything right and has learnt important lessons from this experience.”
Key changes
At the centre of its overhaul, Pay.UK has proposed a three-part package of reforms which it feels would bolster the UK’s payments infrastructure and drive future improvements.
The first element of the plan is to expand the composition of its board, bringing in greater senior-level expertise from a more diverse range of industry participants.
This builds on recent steps to increase industry representation and is designed to ensure that strategic decisions benefit from a broader set of perspectives.
The second proposal is to create a new subsidiary, dubbed ‘Change Co’. This would be an industry-led board that would hold binding decision-making powers over strategic change for retail interbank payments.
By embedding this within Pay.UK’s existing corporate structure, the organisation believes it can better align delivery of new payment infrastructure with public interest outcomes, while also giving industry players a decisive role in shaping the future of UK payments.
The third proposal is that alongside these structural changes, Pay.UK will commit to a cultural shift in how it works with the wider ecosystem.
It plans to deepen collaboration with industry participants and end users through initiatives such as greater use of secondments, reforming how it engages with stakeholders, and reshaping its internal councils and committees to foster more effective partnerships.
Pay.UK argues that reforming the existing organisation in this way would be faster, more cost-effective, and lower risk than creating a new payment systems operator or splitting responsibilities across multiple bodies.
“We have considered the role Pay.UK plays, the range of alternatives and how these compare to international examples and we conclude that a best of both worlds approach is needed – industry driving design and delivery of strategic change within the PSO framework of financial stability, access and competition,” the body concluded.
