The UK's Payment Systems Regulator (PRS) has issued an interim report into the supply of indirect access to payment systems and whether competition is working for service-users. Market review into the supply of indirect access to payment systems identifies some of the challenges facing the PRS in ensuring that payment service providers (PSPs) can access payment systems without facing anti-competitive barriers or unnecessary burdens.

The interim report found some positive indicators with regards to the supply of indirect access, including:

• large IPSPs have a number of options to access payment systems;
• there is a reasonable level of overall satisfaction with the quality of the indirect access offering that IPSPs receive;
• the overall feedback we have received to date does not indicate a widespread level of concern with price;
• we are seeing investment and innovation in new and improved service offerings, which should improve quality and choice outcomes for all IPSPs.

However, the report also identifies specific concerns that limit competition and innovation in the provision of payment services. These include a limited choice of indirect access provider (IAP), quality-related issues with indirect access as well as barriers to switching IAPs. These concerns stem from three factors in the payments market:

• industry responses to financial crime regulations;
• lack of entry of IAPs;
• increase in demand for real-time payments.

The PSR names numerous programmes and developments already underway to address the concerns it outlines in its report. The authority intends to monitor the developments in the coming year.

The chart below shows how PSPs can have either direct or indirect access to interbank payment systems. PSPs with indirect access (indirect PSPs – IPSPs) can be agency or non-agency IPSPs:

Source: Payment Systems Regulator

Interested parties can send comments on the interim report to the PSR by 5pm on 5 May 2016. Comments and responses should be sent by email to iamr@psr.org.uk.