UK Payment Systems Regulator Publishes Discussion Paper on Use of Data in the Payments Industry
06/12/2018The U.K. Payment Systems Regulator has published a discussion paper seeking feedback on the use of data in the payments industry. The PSR is the regulator for designated payment systems in the U.K. These are currently BACS, CHAPS, Cheque & Credit, the Faster Payments Scheme, LINK, Northern Ireland Cheque Clearing, Mastercard and Visa Europe.
As the U.K. payments sector undergoes rapid evolution and the collection, analysis and use of payments data plays an increasingly important part in the payments industry, the PSR wants to gain an understanding of the role it might play in ensuring that new uses of data work well for businesses and individuals using payment systems. "Payments data" in this context includes a mix of financial, transactional, behavioural and other types of data, which payment service providers collect in the course of providing payment services to end-users.
The PSR has built on initial scoping work conducted in 2017, by carrying out additional research and analysis to understand the emerging trends and debates around payments data, including discussions with stakeholders in the industry and representatives from consumer organizations. The way that payments data is collected, used and shared can create opportunities for payment services providers and benefits for end-users. However, there may be barriers that prevent the realization of these opportunities. The discussion paper outlines three potential areas the PSR has identified where data use could directly affect its statutory objectives of promoting competition and innovation. These are:
(i) Reluctance of end-users to share payments data with third-party providers of other payments-related services (so-called "overlay services"), due to concerns over whether their data will be treated appropriately.
(ii) Limitations on access to global datasets for potential providers of newer, more innovative payment services, including limited access to the global datasets that would provide valuable information for development of new industry anti-money laundering or anti-fraud measures.
(iii) Potential barriers that could prevent customers and businesses getting the benefits from additional "enhanced" data attached to transactions. The benefits from enhanced data include cheaper and more efficient payments processing (leading to cheaper service provision to end-users).
The PSR has also identified several payments data-related issues that might affect its objectives indirectly, on which it will work jointly with other regulators where appropriate. These issues include the impact of high fixed costs on the collection, analysis and use of data and the potential for enhanced price differentiation.
The PSR seeks comments on discussion questions related to its assessment of the collection and classification of payments data, on the points in the value chain where data could be used to generate benefits for payment system participants, the different ways firms are currently using payments data and on the areas the PSR could develop policies or otherwise take action.
Comments are invited on the discussion paper by September 3, 2018.
View the discussion paper.
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