Visa and MasterCard face scrutiny by new UK watchdog

The UK government is planning to put supervision of MasterCard and Visa alongside the country’s main interbank payment systems into the hands of a new Payment Systems Regulator (PSR), whose chief remit is to inject more competition into the country’s payments industry.

In 2013 the government announced the creation of a new, economic regulator charged with increasing competition and innovation in the payments sector, which has traditionally been dominated by a small number of systems and the big banks.

From April next year, the PSR will have strong new powers to ensure the way the country’s main payment systems are run do not hold back competition in the sector, including requiring competitors such as challenger banks and smaller firms to have access to these systems on fair terms, and if necessary the power to order the owners of the more established systems to break them up or sell them.

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Will The PSR changes work

fraud and risk management specialist

The Payment Services Regulator may make major UK infrastructural changes and legal changes to ‘open up’ the payments industry and access to it in the UK in order to encourage innovation. They have the powers to do many things, but care is certain needed. Caution is most certainly needed.

a) Only yesterday, I received an email telling me that they are not well staffed and resourced; and from my discussion and the stakeholder meetings so far, it appears that they have very little payments industry experience in the team. The objectives of the PSR need to be clear and not driven by a few disgruntled small banks wanting free access to many established infrastructures that are maintained and paid for by all of us.

b) There seems to be a format for these types of regulators who adopt an ‘economic’ regulator agenda. This format of addressing these things has opened up the telecoms networks to new operators, and the water pipe infrastructure in the water business (and Gas and electricity), and the PSR CEO comes straight from one of these. But payments are not the same, and without payment industry knowledge there is a danger that the PRS will regulate in the same way. Some creativity is required by the PSR – to ensure it does not simply act in ‘the same way’.

c) The biggest danger is that because payment systems are global and becoming more global, and as the UK is a leading global payments hub, that action by the PSR will make the UK market something different – uncompetitive, and isolated – so care must be taken NOT to do this.

d) The main restrictions on the payments ‘gateways’ are not competitive or restrictive as they were with water, electricity, gas and telecoms. The payments infrastructure is open to anyone who wants to ‘play’. The bigger restrictions are quite rightly about the governance and controls over money laundering – which requires very tough controls and restrictions to be imposed, managed, and governed. Again, The PSR needs to step carefully.

Author Bill Trueman, is Payments, Fraud & Risk Specialist and Managing Director of UK Fraud and Riskskill

Source: https://www.linkedin.com/pulse/article/20141015091911-6227568-will-the-psr-changes-work