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Following the UK government’s comments on the New Payments Architecture in the National Payments Vision, the Payment Systems Regulator (PSR) has begun setting out its plans to amend the rules for its governance at Pay.UK.
The PSR has opened a consultation on proposed changes to its Specific Direction 3 (SD3), which governs Pay.UK’s legal responsibilities in modernising payment infrastructure for faster payments (FPS).
The consultation follows significant changes to the New Payments Architecture (NPA) programme, making it impossible for Pay.UK to meet the current SD3 requirement to migrate all FPS transactions to a new, competitively procured system by July 1, 2026.
This delay is expected to extend the lifespan of the existing FPS infrastructure far beyond earlier projections.
The PSR is proposing amendments to SD3 to ensure the resilience of FPS and strengthen regulatory oversight, while advancing its key objectives: improved access; innovation; adaptability; reduced financial crime; and enhanced competition, including promoting account-to-account retail payments as viable alternatives to card-based systems.
This follows the UK’s government’s subtle critique of progress with the New Payments Architecture so far.
In the National Payments Vision, HM Treasury said it had “considered carefully” the role of the New Payments Architecture programme and concluded that “a more agile and flexible approach to delivering the UK’s infrastructure needs is required to ensure the UK is primed to seize the opportunities of next generation technologies.”
What is the PSR consulting on?
The PSR is seeking feedback on its proposed changes to SD3:
- Removing the current SD3 deadline: The PSR suggests eliminating the existing deadline and granting itself the authority to set a new timeline. Any revised deadline would not be before July 1, 2036.
- Strengthening oversight: A "non-objection" mechanism would require the PSR's approval before Pay.UK finalises or extends contracts for infrastructure services, ensuring alignment with regulatory goals.
- Enhancing the regulatory framework: The PSR plans to update its 2021 Regulatory Framework to mitigate risks to competition and innovation, with a detailed consultation timeline to be published alongside the SD3 decision.
Stakeholders are invited to submit feedback on the proposed changes by 5pm on January 21, 2025; the PSR aims to deliver its decision in Spring 2025.
What does the National Payments Vision suggest?
In the National Payments Vision, the UK government tasked the Payments Vision Delivery Committee to direct the Bank of England and the PSR in refreshing the strategy for the UK's retail payments infrastructure.
This includes clarifying upgrades needed for FPS, assessing broader infrastructure requirements and proposing governance reforms, including changes to Pay.UK.
The approach, which the government says needs to be outlined by Q2 2025, will address regulatory congestion while addressing “the need for the UK’s infrastructure to serve equitably a diverse array of market actors, both in terms of functionality and access”.
