The Payment Systems Regulator (PSR) has confirmed its decision to go ahead with reforms to the UK payment systems to promote competition. The regulator conducted a review in December 2016, which found there is no effective competition in the provision of central infrastructure for the main UK retail payment systems: Bacs, Faster Payments and LINK. To promote competition, the PSR has announced the following two actions:

1. To undertake a competitive procurement process for future central infrastructure contracts. This will ensure fair, open and transparent procurement of central payment systems infrastructure and will enable new technology providers to enter the market and drive new and innovative products and services.
2. To adopt a common international messaging standard for Bacs and Faster Payments to lower barriers and encourage new entrants to the market.

PSR's Hannah Nixon said: “These remedies are another step forward in our strategy to bring about a once in a generation change to UK payments. This work will remove barriers to entry, create a competitive procurement process and drive innovation to help meet the needs of all users of payment systems – be they consumers, small businesses, or banks.”

The UK payments industry is expected to start implementing the proposals immediately, with the goal of seeing benefits from 2020. Faster Payments has already adopted common messaging standards.

In its statement, the PSR said that, while the ownership and governance arrangements at Vocalink reduced the level of competition in the provision of central infrastructure services, Mastercard’s recent acquisition of Vocalink is expected to address these issues.