The UK’s Payment Systems Regulator (PSR) updated its strategic priorities first set out three years ago, announcing new ambitions to fit in with a new regulatory and technological era.
The regulator, one of the country’s primary finance regulators alongside the Financial Conduct Authority (FCA) and the Bank of England’s (BofE) Prudential Regulatory Authority (PRA), has set out three priorities for 2025 and the following years.
Fraud still in focus in 2025
Firstly, the PSR states it will complete its work around protecting users and promoting competition and innovation. On the topic protecting users it can be expected that the PSR may take further action around fraud, an extensively discussed topic last year with UK fraud losses standing in the hundreds of millions, with £580m stolen in H1 alone.
To bolster consumer protection against this criminal activity the regulator introduced new reimbursement requirements this year, though these were fiercely debated by the payments industry. The regulator states it will build on this in 2025 while also completing its review of card markets.
“Payments are at the heart of our everyday lives, from sending money to friends and family and paying for services and creating opportunities for our fintech sector, payment systems are essential to all of us,” said David Geale, PSR Managing Director, in a video published on the organisation’s website.
“Since launching our strategy in 2022 we have introduced world leading protections against authorised push payment (APP) fraud. We have advanced Open Banking, and we have driven forward two reviews of card market fees – but the payments landscape is constantly evolving, and with new technological market innovations, we know there is more for us to do, and our strategy has to evolve today.”
The regulator also states that it will work with the Bank of England to upgrade the Faster Payments System (FPS). It is unclear what exactly these upgrades will entail, though a general expectation is that it will focus further speeding up UK payments, making it more akin to an instant payment system.
Enhancing the system’s resilience against fraud could be another focal area though. Amid the aforementioned extensive discussion around fraud in the UK, the Payments Association (TPA), the trade body for British payments, published a report claiming that the speed of transactions on the FPS are being exploited by fraudsters.
More regulatory cooperation
In addition to working more with the BofE, the PSR also states that it will cooperate closely with the FCA over the coming years. In his speech, Geale explained that the PSR will work with the FCA on taking the UK’s wider Open Banking framework forward and on delivering the initial phase of variable recurring payments.
Open Banking has been a priority for Britain’s payments regulators, as well as legislators interested in the issue, for some time. Under the previous Conservative government, some claimed that the UK had achieved a leadership position in Open Banking.
Adoption has been increasing across different metrics as well, with Trustly’s Ecospend revealing that many people are using Open Banking for tax payments, with the company being a partner of the HMRC tax office.
The Labour government, elected in July last year, prioritised Open Banking development as a core financial policy in its election manifesto. It has since launched legislation in this area, focusing on areas like smart data to better unlock Open Banking. Given these government priorities, it is unsurprising that the PSR and FCA share similar ambitions.
UK payment retail infrastructure is a final focal area of the PSR. The regulator intends to initiate a review of Pay.UK, the organisation which runs Britain’s retail payments operations, and try to better assess the long-term retail infrastructure needs of the country.
Lastly, the PSR has made a general commitment to ‘sharpen our focus’ around competition and innovation in payments to support economic growth – the UK’s economic growth having slowed slightly in H1 2024 except for December – and enable the ‘ecosystem of the future’.
Geale summarised its ambitions: “We will build up our innovation capability. We will remove barriers where they are within our remit, and we will help to create the conditions for innovation and payment systems to thrive.
“How we work is, of course, just as important. We will work with our regulatory partners and engage closely with all our stakeholders, merchants, businesses and representative bodies from both consumers and industry as well as innovation to inform our work, and we want to hear your views.
“We look forward to working with you to deliver on our commitment and to help ensure payment systems work well for everyone, both now and into the future.”