The Payment Systems Regulator (PSR), the UK's regulator and competition authority for payment systems, has recommended that VocaLink, the UK's payments infrastructure provider, should no longer be owned just by a relatively small group of banks.
Concerns that ownership structure limits competition
VocaLink was founded in 2007 by a consortium of banks. The system processes the vast majority of payments in the UK, accounting for 90 per cent of salaries, more than 70 per cent of household bills and almost all state benefits. In 2015 it processed over 11 billion transactions with a value of £6 trillion. It is currently owned by 13 banks including the main UK banking groups (HSBC, Santander, Co-operative, RBS, Lloyds and Barclays). The full list of VocaLink's owners is shown in the table below.
The PSR's statement said: “While this ownership arrangement has resulted in payment systems that are relatively robust and resilient, there have been concerns that it may limit competition and in turn limit innovation.”
Need for competition and innovation
The PSR is therefore proposing that these banks sell part of their stakes in VocaLink in order to open the market and allow for more effective competition and innovation. It also suggests a new competitive and transparent procurement process for payment services, as well as a common messaging standard for UK payments.
The PSR's full report is open for consultation until 21 April.
Payments UK reaction
A spokesperson for Payments UK, the UK payments industry trade association, welcomed the PSR's report and said it would respond fully in due course. It stated: “The payments infrastructure is a critical part of the UK economy and it is vital that the optimum outcome is secured for the UK and that unintended consequences are avoided. Through our World Class Payments work we have developed a vision of the future that proposes simplification to support competition, innovation and to deliver new customer benefits, and we have also led the work to develop international standards to support these goals. Our work should facilitate and support whatever the regulator decides.”
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