The Payments Strategy Forum has launched an initiative to overhaul the UK payments system, saying it will improve protection and security for consumers and businesses.

In what it calls the UK payments system's “most radical change since the 1960s”, the forum's Final Strategy aims to make changes that will “put the interests of those that use payments services centre stage”. The forum is a body of experts, whose members include consumer groups, businesses, fintechs, UK banks and building societies, set up by the Payment Systems Regulator (PSR). It has said it aims to have the proposals set out in its strategy in place by 2020.

Stamping out financial fraud

The strategy will help to stamp out financial fraud and help people have more control over how they manage their personal finances, according to the forum. It also promised safer and more secure banking and opportunities for new banks and fintech companies to compete and offer innovative services.

Chair of the Payments Strategy Forum, Ruth Evans, said: “Around £755 million was stolen from UK bank accounts last year and the problem looks set to worsen as criminals become more technologically savvy. We need to address the issue head on.”

More control and security

The proposals in the strategy include:

1. a key new safeguard, ‘Confirmation of Payee’, to help prevent financial fraud. This will allow people to avoid sending payments to the wrong account, either by accident, or being tricked into doing so, by ensuring a confirmation of the recipient is sent to the payer before any funds leave their account.
2. the introduction of ‘Request to Pay’, which will allow customers to authorise a regular payment, such as a utility bill or gym membership, before the company withdraws the money from their account. This will be a huge boost to people on variable incomes who may struggle to settle their accounts at the same time each month.
3. the consolidation of the governance of three payment system operators, Bacs, Cheque and Credit Clearing Company (C&CCC) and the Faster Payments Service (FPS), into a single entity to begin the process of simplification.
4. this new entity will be responsible for implementing the centrepiece of the Forum’s strategy - a new payments architecture that is simpler, more accessible and more responsive to innovation - to benefit future UK customers and businesses.

Payments UK's Tim Yudin said: “It is great to see that the proposed changes mirror our own vision for the future direction of the payments industry. Payments UK’s evidence-based World Class Payments work, which is strongly supported by our wide and ever increasing membership, has clearly helped shape much of the PSF’s thinking around simpler access, greater innovation, increased competition, improved data handling and better security."

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CTMfile take: After presenting its draft strategy in July this year and going through a consultation process, the Payments Strategy Forum has now published its 'final strategy', which can be read in full here.