The Payments Association welcomes UK’s Future of Payments Review call for national strategy to re-establish world-leading status

The Payments Association, the most influential community in payments, has welcomed the release of the report following the Future of Payments Review, commissioned by the Chancellor. The report calls for a National Vision and Strategy for Payments considering the importance of payments to consumers and the economy, the many billions of pounds being invested and the highly interdependent nature of the many different initiatives in the payments arena.

The report, authored by former HSBC UK and Nationwide Building Society CEO Joe Garner, was released alongside the Chancellor’s Autumn Statement and reported: “A world-class payments ecosystem is essential – not just to the economy – but to the lives of every member of our society,” and cited £107trn flowed through UK payments systems last year – equivalent to 44 times GDP.

Commenting on the release of the Garner Report, Tony Craddock, Director General of The Payments Association, said: “At last! An independent report that shines a spotlight on payments and provides the guidance the industry and its regulators so badly need.”

“There are too many conflicting and overlapping initiatives, too many stakeholders fighting their own corners, and not enough protection for consumers making payments between bank accounts. If we can implement the recommendations of the Garner Report we will steer clear of the cliff edge and help to re-establish the UK’s leadership in payments. Everyone will benefit – from greater security, lower fraud, and a more innovative payments ecosystem.”

“I just hope this is the start of the government’s interest in payments, not the end of it. We are where we are because neither the industry nor the regulators have provided sufficiently strong leadership. The Payments Association supports the government’s leadership of our industry because the future of payments is too important to leave to chance – or to risk that squabbling stakeholders continue to prevent the progress that is both possible and necessary.”

The underlying theme of the Garner Report resonates strongly with The Payments Association’s Payments Manifesto, which preceded the report and was released in October this year. The Payments Manifesto called for the industry to stand as a united front to tackle issues such as APP fraud and the benefits of adopting a risk-based approach to cross-border payments. Both the Manifesto and the report stressed that innovation has been key to the UK’s payment industry success and that we need to encourage investment to ensure the country re-establishes its world-leading status.

The Garner Report’s findings indicate that while cash must be able to co-exist peacefully with digital payments, it is imperative that UK consumers and businesses have access to world-leading payment solutions in a secure and reliable environment in order to protect vulnerable users. Garner stressed that due to a strong track record of reliability in the payments space, fast and secure contactless infrastructure and a leading mobile purchasing experience enhanced by the high adoption rates of digital wallets, the UK’s purchasing experience is one of the best in the world.

The report has several important conclusions:

We need a plan.

The Treasury is to lead the production of a National Vision and Strategy for Payments.

”We hope this will include the New Payments Architecture, digital currencies and cash, as well as payments for businesses and wholesale payments, as they are all important parts of the mix,” said Craddock.

“Our community will welcome anything that simplifies the landscape over time. We also believe that a healthy payments ecosystem is essential to a healthy competitive economy, and that, according to the report, with a clear vision for the future, payments can help unlock GDP growth through fostering small business growth, frictionless trade, and Fintech innovation.”

We need open banking to be set up for success

On open banking, the report recommends HM Treasury, JROC and industry participants prioritise addressing the need for a basic level of consumer protection and clarity on liability for payments made via Open Banking, again resonating with The Payment Association’s manifesto.

The Treasury also intends to bring a commercial reality to Open Banking and bank-to-bank payments, so that retailers and consumers can benefit from lower prices and more choice, while rewarding industry participants for playing their part in enabling this. “By commercialising Open Banking”, said Craddock, “a wave of new products and services will come to market, providing strong competition for scheme-based payments, lower costs for merchants and more choice for consumers”.

We need to repeal bad regulations right away

Another important development announced by the Treasury is the decision to repeal the payment authorisation rules inherited from the EU. Strong Customer Authorisation (SCA) has been a rules-based approach to ensuring consumers are authorised to transact. In future, it is hoped that outcome-based regulations will enable innovators to achieve the same outcome without consumers needing to experience the friction – and the industry the burden – of SCA.

We need to get our heads together

Following the release of the Garner Report, The Payments Association is proposing to ally with policymakers, lawmakers and all main market players including other trade associations, regulators and government stakeholders, as well as users from retail and Big Tech companies. Such a ‘Payments Alliance’ could focus on how best to support the production of the UK’s National Vision and Strategy for Payments or undertake short-term work such as developing a prioritisation mechanism for the inflight initiatives currently in.

“A Payments Alliance could complement the Treasury’s ambitions and plans. In the coming weeks we will see how our community of over 200 companies across the payments ecosystem can best provide practical support for the government in its work to build a National Vision and Strategy for Payments, as Australia has with such profound effect”, said Craddock.

With the support of The Payments Association’s Advisory Board, its 150 Working Group volunteers and numerous member participants, as well as our partners, we have supported the production of a really useful snapshot of the payments industry and some pragmatic, strong recommendations by Joe Gartner and his team. As Craddock says, however, “Now is the time to for execution, where the rubber really meets the road”.

The Payments Association runs seven stakeholder Working Groups covering financial inclusion, regulation, financial crime, cross-border payments, open banking, digital currencies and ESG. The volunteers in these groups represent the collective views of the industry and work together to ensure the big problems facing the industry are addressed effectively.

To learn more, download a copy of ‘The Payments Manifesto: Building a World Class Payments Industry – Together’, here: https://thepaymentsassociation.org/the-payments-manifesto/