Competition and Innovation in the UK’s New Payment Architecture

There are just ten days left to respond to the Payment Systems Regulator’s (PSR) Call for Input on ‘Competition and Innovation in the UK’s New Payment Architecture’ – the Call for Input closes on the 24 March 2020.

The Call for Input can be found at: https://www.psr.org.uk/psr-publications/consultations/new-payments-architecture-call-for-input

The PSR state that they have issued the Call for Input to address issues that could arise in the UK’s New Payment Architecture (NPA) initiative.

In referring to the NPA as the UK’s proposed new way of organising the clearing and settlement of payments between banks the PSR state that the importance of the NPA should not be underestimated. The PSR also state that the NPA will be a once in a generation change to the very fabric of the UK’s interbank payment systems and will encourage the development of services that will make transactions safer and give everyone more control over who, when and how they pay.

As you would expect the PSR want to see the NPA delivered in a way that drives innovation in payment systems and benefits the people and businesses that use them.

The PSR’s Call for Input provides the regulators view of some of the competition issues which might arise during the procurement of infrastructure for the NPA.

The Call for Input seeks feedback from interested parties on a number of topics, including the likelihood of competition issues materialising in the NPA and how harmful or significant they could prove to be. The document also contains a range of potential mitigations for the issues that have been identified and seeks responses from interest stakeholders.

The purpose of the PSR’s initiative is to provide greater clarity and more detail on the PSR’s expectations, concerns and regulatory approach. The PSR plan to publish a ‘Policy Statement’ to explain what bidders, participants and other users can expect from the PSR and the NPA becomes a reality. The PSR expects to publish the statement before the end of 2020.

The Call for Input identifies potential vertical and horizontal competition and monopoly issues.

The Call for Input states that, due to the competitive procurement project, it is not concentrating on the monopoly risks (the PSR will address this aspect within their oversight of the procurement process) but is focussing on the potential vertical and horizontal competition issues that may arise.

Having identified the potential competition issues the Call for Input covers potential mitigations to the two identified competition issues.

Finally, the Call for Input outlines seven questions seeking feedback on the horizontal and verticalissues raised.

The Call for Input can be found at: https://www.psr.org.uk/psr-publications/consultations/new-payments-architecture-call-for-input

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