World Class Payments take shape in the UK
Advances in technology, and particularly consumer demand, are driving change and making the payments environment an interesting place to be in the years ahead, writes Maurice Cleaves.
The payments landscape is growing and evolving. These changes are being driven by several dynamics. April saw the introduction of a new Payments Systems Regulator in the UK, to oversee the industry and the wider objectives of competition. In the EU, we have also seen new pieces of regulation such as the Payment Services Directive and PSD2 which are opening up the markets across the EU.
Yet the advances in technology, and particularly consumer demand, are driving change and making the payments environment an interesting place to be in the years ahead. We only have to look at recent examples to highlight this case. This month, tech giant Apple will launch Apple Pay, a move some suggest could see accelerate the demise of the plastic card or indeed our wallets altogether. In addition to this, recent figures showed that 2014 was the first time non-cash payments overtook cash. The simplicity and ease of using digital payments will only become ever more popular.
Our recent announcement to relaunch the Payments Council as Payments UK comes at an important time for the industry. We plan to build on the successes of the past decade to make sure the UK remains a world leader in payments. Leading innovations such as Faster Payments, Chip and PIN, Paym and the Current Account Switch Service have not only improved customer expectations, but led to many other countries adopting our technologies too.
Payments UK has a key role to play in joining up the varied players in the industry. All the payment innovations that have been delivered over the past decade were made possible through close cooperation, albeit amongst competing businesses. The pace of change in technology and the increasing number of new payment providers entering the market means our role will be more crucial than ever.
At the last count there were around 1,500 payment institutions with differing business models. This is likely to increase in the years to come. We will be working closely with the PSR. It has an important role to ensure continued innovation in the collaborative space and that competition co-exists in an evolving environment. We want to ensure that by bringing the growing payments players together, we can continue to deliver the market momentum and necessary efficiency and innovation to the payments industry.
Through our World Class Payments project, we are actively engaging with stakeholders across the industry, in government, regulators, businesses and consumer representative groups to create a vision of what payments of tomorrow could look like if they are built on customers’ needs.
The purpose of WCP is to help ensure change happens for the right reasons, in the right order and at the right time and to avoid unintended consequences – so that the country enjoys the maximum benefit from technological developments but also to help the industry make the very best investment decisions. We will be publishing a report providing detail on the World Class Payments project later this year. The PSR and the Bank of England are both key influencers on this work.
With so many new entrants in the market this will be vital in order to ensure effective engagement between traditional banking and those new players. There is a clear imperative to balance the protection of consumers and other users, maintain wider security and crucially sustain the integrity of the payments system itself.
From my point of view, Payments UK has a unique role in the evolving payments landscape where a new economic regulator has entered to help to drive change. The balancing of responsibilities will come clear over the coming months as the PSR continues its development and the marketplace becomes ever busier.