UK 'National Payments Vision' Coming Soon, Government Confirms

March 11, 2024
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HM Treasury has announced that it will publish a UK National Payments Vision “as soon as possible” in 2024, as per the recommendation of the Future of Payments Review.

HM Treasury has announced that it will publish a UK National Payments Vision “as soon as possible” in 2024, as per the recommendation of the Future of Payments Review.

On Friday (March 8), the Treasury confirmed that it has accepted the recommendations of the Future of Payments Review, including the publication of a National Payments Vision.

“The objective of the National Payments Vision is to provide clarity on the government’s ambition for UK payments,” said the agency.

“It will seek to guide industry and regulatory activity through providing direction on the shared outcomes the government seeks to achieve to ensure a world-leading payments ecosystem.

“The Vision will serve as the government’s full response to the Future of Payments Review.”

The National Payments Vision will build heavily on the work and engagement undertaken by Joe Garner, former CEO of Nationwide, who led the Future of Payments Review.

To ensure that the vision remains consistent with the views shared through the Future of Payments Review, the Treasury confirmed that Garner will stay on as an advisor to the project.

The government will also undertake a “comprehensive programme of engagement” and will work closely with key trade associations and membership bodies to gather views.

One of those trade associations is the Payments Association (PA), whose director general, Tony Craddock, welcomed the Treasury’s plans.

“I am delighted to see confirmation that HM Treasury is engaging with industry through trade associations such as PA to get the input of the industry,” he said.

Craddock endorsed this arrangement as more efficient, as opposed to conducting another public consultation process to further inform the vision.

 “We do not have time, nor do we need to do this,” he said.

The PA chief also said he is delighted that Garner has been appointed as an advisor, and that the National Payments Vision will be published this year.

However, he said he would have preferred a guarantee that the vision will be ready in time for the chancellor’s Mansion House speech in July.

James Borley, managing director for payment services and financial crime at Cosegic, told Vixio that he is also pleased that there will not be another public consultation ahead of the National Payments Vision.

In July last year, when the Treasury launched the Future of Payments Review and issued its call for input, Borley said there had been a “collective groan” from the payments industry.

Fatigue had already set in, he said, following a consultation on changes to the Payment Services Regulations (PSRs) 2017 and Electronic Money Regulations (EMRs) 2011, which ran from January to April 2023.

That consultation “seems to have fallen into a black hole”, Borley noted, as the Treasury pivoted to the Future of Payments Review and now to the National Payments Vision.

It would have been more efficient to combine the responses to each consultation into a single, comprehensive framework and strategy, he said.

What will be included in the vision?

The National Payments Vision will be built around the ten recommendations that were put forward in the Future of Payments Review.

The ten recommendations covered three areas: 

1) Consumer experience. 
2) Open banking. 
3) Regulatory oversight and alignment.

A key aim of the National Payments Vision strategy will be to “simplify” the UK’s payments landscape so that improvements can be made in these three key areas in a more coordinated way.

To improve consumer experience, the review proposed that the industry move away from “detailed technical standards” as the basis of strong customer authentication (SCA) requirements.

In their place, an outcomes-based approach should be established, supervised by the Financial Conduct Authority (FCA).

On open banking, the review proposed that steps should be put in place so that it can be exploited more fully for consumer payments needs.

For example, a minimum form of dispute resolution should be introduced for consumer protection when making open banking payments.

“This will create the trust and security that consumers need to adopt open banking solutions,” the review noted.

Similarly, the review argued that the UK must improve the payments journey for person-to-person open banking payments, describing current offerings as “clunky” relative to peer competitors.

“We believe that open banking journeys can rival the best in the world — if we focus on them,” it said.

On a related note, the review argued that an open banking payments journey must be developed to give merchants an alternative to card schemes.

This would help to put downward pressure on card scheme fees — another issue that the Payment Systems Regulator (PSR) is currently investigating.

“If choice can be created, we believe that merchant dissatisfaction will decrease,” it said.

The final three recommendations relate to regulatory activity and regulatory alignment.

The review proposed that the PSR should conduct a review of its new authorised push payment (APP) fraud rules one year after their implementation (which is set for October 2024).

It also proposed that the government should set “more ambitious” fraud reduction targets beyond 2024, focusing on preventing fraud before it happens.

Finally, the Treasury and other financial regulators are recommended to review the way they regulate fintechs, and should also seek “closer alignment” so that the number of regulatory initiatives affecting firms is reduced by 10 percent.

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