Not enough competition in payment processing tech, thunders regulator

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A UK government regulator is calling for greater competition in banking payment infrastructure provision.

The Payments Systems Regulator’s (PSR) market review into the ownership and competitiveness of infrastructure that supports the three major UK payment systems – Bacs, Faster Payments Service (FPS), and LINK – concluded that reform was needed.

PSR opened up an eight week consultation period, due to run until 22 September, on its de-regulation plans.

“We have found that there is no effective competition for the provision of UK payments infrastructure for the three interbank payment systems,” the review by the PSR concluded.

Its proposed remedies include a enhanced interoperability, including a common international messaging standard, for Bacs and FPS (LINK already provides inter-operability). The regulator is also recommending divestment by the four largest payment service providers of their interest in VocaLink, among other measures.

MasterCard announced that it intended to acquire VocaLink, which operates key payments technology platforms on behalf of UK payment schemes, earlier this month.

Alain Falys, chief exec and co-founder of mobile wallet company Yoyo Wallet, welcomed the PSR’s report and decision to open up a consultation.

“This announcement seeks to break down the current payments status quo which has remained stagnant in this country for too long,” Falys said. “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.”

PSR defines the payment systems infrastructure as the “hardware, software, secure telecommunications network and operating environments that supports the clearing and/or settlement of a payment”. An efficient payment infrastructure should be efficient and reliable while minimises costs to businesses and consumers. ®

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