The Payments Systems Regulator (PSR) has announced that the UK payments infrastructure needs to undergo reform in order to increase competition and to better meet consumer needs.

The announcement follows PSR’s market review into ownership and competitiveness of the infrastructure that supports three payment systems – Bacs, Faster Payments Service and LINK. The regulator concluded that there is no effective competition for the provision of UK payments infrastructure for these three payment systems.

As a result of the findings, the PSR is consulting on a series of changes to remedy the current situation. These include adopting a common international messaging standard to encourage new entrants, and creating a competitive procurement process to address consumer needs.

Furthermore, the regulator identified the common ownership and control of both the payment systems and the infrastructure provider as a key concern. A relatively small number of large banks currently control the payment system operators.

The PSR also expressed concerns over infrastructure provider VocaLink, claiming that banks should sell all or part of their stakes in the firm to encourage effective competition and innovation. Recent news that a 92.4 per cent stake in VocaLink is to be purchased by MasterCard could help to address these highlighted issues, according to the regulator.

Hannah Nixon, managing director of the PSR, commented: “As it stands, the current system is not adequate and we need to see a change. There is not one single area of concern, but a series of issues that are entwined and require a holistic approach in order to see them resolved. The remedies we are considering are packaged to achieve just that.”

Share Story: