Jana Mackintosh is Managing Director for Payments and Innovation at UK Finance. She is experienced in competition and regulatory policy, having worked across a number of public and private sector organisations in several markets.
First, what are the current main features of the UK payment landscape, and what have been the main changes over the last five years?
The UK payments landscape has changed dramatically over the last decade. Ten years ago, cash was the most common payment type, with over twice as many payments as debit cards. The use of cash is now in decline and debit card payments (including digital wallets) account for most spontaneous payments. UK consumers and businesses still rely heavily on direct debits (pull payments) for many regular payments. In recent years, there has been a steady increase in the use of faster payments (bank-to-bank push payments), and given the regulatory appetite to encourage the use of account-to-account payments, this is expected to grow further. A notable piece of work during the last five years has been the development and enactment of plans to upgrade the retail and wholesale payments infrastructure. Over the next two years, the Bank of England upgraded RTGS system will go live, as will the New Payments Architecture (NPA). Both will work on ISO200022 standards and the NPA will offer new payment types, including ‘instant’ that could be used for point-of-sale transactions, as well as enhanced overlay services, such as confirmation of payee and request to pay.
Could you tell us more about Confirmation of Payee (CoP) and developments around Authorised Push Payment (APP) fraud in the UK?
Launched in 2020 by Pay.UK, CoP is a name checking service for UK-based payments. It has now been successfully implemented by 30+ UK banks, building societies, and other payment service providers (PSPs). The aim of the service is to reduce certain types of fraud as well as misdirected payments. CoP was never intended to be the silver bullet to Authorised Push Payment (APP) Fraud. However, it has quickly become an embedded function that customers see when making a new payment or amending an existing one. Today, CoP covers over 90% of transactions made via Faster Payments, by October 2024 full market coverage is expected. In late 2022, the Payment Systems Regulator (PSR) consulted on new measures to protect people from fraud by giving PSPs good incentives to prevent scams and making sure victims get their money back.
How is Open Banking expected to evolve in the UK?
2023 has the potential to be a milestone year for Open Banking. Following on from the Strategic Working Group’s (SWG) “sprints”, we are expecting the regulators to issue their vision and roadmap in Q1 2023. We expect this to cover key themes including bridging ecosystem gaps, unlocking the potential of Open Banking payments, potential further data-sharing propositions, and how to put the development of Open Banking on a more sustainable footing. UK Finance is looking forward to engaging with the industry on these themes, and the issues underpinning them, such as the wider vision for Open Banking and the functioning of the future entity.
Links: https://www.paymentscardsandmobile.com/the-transformation-of-the-uk-payments-landscape/