The Payment Systems Regulator (PSR) has announced that the UK payments infrastructure is outdated and in need of serious reforms in order to better meet consumer needs and increase competition between financial institutions.
The announcement comes at the end of a market review into the ownership and competitiveness of the infrastructure that supports three key payment systems - Bacs, LINK and the Faster Payments Service. The PSR found no effective competition for the provision of UK payment infrastructure for all three payment systems.
As a result of its findings, the PSR is consulting on a series of changes to remedy the current situation, including the creation of a competitive procurement process that addresses consumer needs.
The UK's payment infrastructure governs all payments, from small personal transactions using credit cards, all the way up to massive transfers of funds between corporate entities.
"We need to future-proof the payments system so that the UK can continue to be at the forefront of payments innovation and deliver the best service to consumers," said Hannah Nixon, managing director of the Payment Systems Regulator. "This means ensuring there is effective competition and that new entrants face the right conditions to enable them to come to market."
The announcement was welcomed by several mobile payments providers and other disruptive financial services which aim to shake up the existing infrastructure with digitally-driven solutions.
"This announcement seeks to break down the current payments status quo which has remained stagnant in this country for too long," said Alain Falys, CEO and co-founder of Yoyo Wallet. "The best case scenario is that we now see a flood of innovative competitors coming to the fray – where the needs of consumers, and not the needs of the major payment players, will drive the sector forward."
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