The Payment Systems Regulator (PSR) has outlined proposed changes to the way payment systems infrastructure is procured and provided, in a move designed to foster greater competition.

Earlier this year, the PSR unveiled the conclusions of its market review into the ownership and competitiveness of the infrastructure that supports three UK payment systems – Bacs, Faster Payments Service (FPS) and LINK. The review found that there was no effective competition for the provision of central infrastructure for these payment systems.

The PSR identified the common ownership and control of both the payment systems and the infrastructure provider (VocaLink) as a key concern. It also cited the need to adopt a common international messaging standard to encourage new entrants, and create a competitive procurement process that addresses consumer needs.

Two proposals have been put forward by the PSR to address these issues. The first measure is to mandate a competitive procurement process that allows new providers with different technology to enter the market.

The second proposal focuses on the adoption of a common international messaging standard for Bacs and FPS in an effort to lower barriers and encourage new entrants to the market.

Hannah Nixon, managing director of PSR, said: “The remedies we are putting forward are another step in our strategy to bring about a once in a generation change to UK payments. The work being undertaken will help open up the payments industry and promote more effective competition and innovation to help all users of payment systems – be they consumers, small businesses, or banks.”

As part of the plans, the PSR also announced that it will not, at this stage, be imposing the divestment remedy on VocaLink, the UK payments infrastructure provider. The PSR said that the proposed acquisition of the company by Mastercard would address the ownership related competition problems it had identified in its final infrastructure market review.

Nixon added: “The measures we proposed, together with a change of ownership of VocaLink, will remove barriers and create a competitive procurement process, opening up central infrastructure to competition.”

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