UK Payment Systems Regulator Reports on Bank Ownership of Payment Infrastructure

The Payment Systems Regulator published its final report on its market review into the ownership and payment infrastructure competitiveness in the UK. The final report follows the PSR’s interim report which was published in February 2016. The PSR has concluded that there is currently no effective competition in the provision of UK payments central infrastructure services for Bacs, FPS and LINK (notwithstanding general satisfaction by operators and PSPs in terms of value for money, quality of service and innovation received from providers). This is partly because the operators have not periodically run competitive procurement processes or sufficiently tested the market when reproducing core infrastructure services. This means that the incumbent provider, VocaLink, has faced limited competitive pressure and minimal incentives to provide more efficient and innovative services. 

The final report outlines potential remedies for issues of competition and the provision of infrastructure services for Bacs, FPS and Link. The remedies are proposed as a package consisting of the following measures: (a) undertaking competitive procurement exercises, such as issuing guidance and requiring operators of payment service providers to follow a prescribed set of processes, (b) implementing enhanced interoperability, including a common international messaging standard, for Bacs and FPS, and divestment by the four largest shareholders in VocaLink. The PSR is seeking initial feedback on the remedies ahead of its full consultation later this year. Comments on the proposed remedies are due by September 22, 2016. A decision on the proposed remedies is expected in early 2017.

View the Final Report.