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Payment systems infrastructure remedies: driving innovation?

On 20 June 2017 the UK’s Payment Systems Regulator (‘PSR’) published its remedies decision resulting from its ‘Market review into the ownership and competitiveness of infrastructure provision.’

The remedies decision follows the PSR’s final report on the ownership and competitiveness of the central infrastructure that supports the three interbank payment systems, published in July 2016, and here, Miles Trower, Partner and Head of Competition at TLT LLP, evaluates the PSR’s mandated remedies, exploring whether they are likely to bring about radical change and indeed whether they might instead have unintended consequences.

The PSR’s latest decision is intended to drive greater competition in the procurement of payment services infrastructure and to help alternative
providers create new - and improve existing - services for all users.

Although focused on a straightforward objective1, the payment services sector is highly complex with multiple layers, different functions and providers, encompassing:

  • payment schemes, such as Bacs, Faster Payments Systems (‘FPS’) and LINK, which administer their underlying payment systems and
    establish the rules that apply to different payment transfers;
  • the central (processing services) infrastructure, notably VocaLink, on which the above payment schemes depend to communicate with each other; and
  • financial institutions as well as interlinking gateway and payment service providers, such as PayPal.

The UK’s payments infrastructure is highly regarded for its operational security, fraud prevention measures, innovation and overall resilience. But, the presence of multiple layers, players and systems...

To continue reading this article, which first appeared in 'Payments & FinTech Lawyer' in July 2017, please see the attached PDF.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2017. Specific advice should be sought for specific cases. For more information see our terms & conditions.

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