UK Finance pushes for regulation in Open Banking strategy

UK Finance, which represents nearly 300 British financial services firms, has set out new recommendations for the future strategy of Open Banking payments.

The trade association said that there are now over 2.5 million Open Banking payments a month compared to just 320,000 in the whole of 2018.

In a report, the organisation outlines how there should be further development of Open Banking payment standards, supported by industry governance and an associated technical group. UK Finance said that this should be considered following the Competition and Markets Authority’s (CMA) decision on Open Banking governance and a successor body to the Open Banking Implementation Entity (OBIE.)

UK Finance also claimed that there is a case for exploring a voluntary framework for Open Banking payments. It warned that without a multi-lateral industry framework, where roles, responsibilities, and liabilities of different market participants could be described, there could be fragmentation in the market.

“There is growing use of Open Banking payments for e-commerce, and the development of Variable Recurring Payments (VRP) offers the potential to extend Open Banking to subscription payments in the future,” said UK Finance. “This gives customers more choice about how they pay and an alternative to card-based payments, offering more competition in the market.”

The organisation recently supported a VRP Hackathon which demonstrated use cases for such Open Banking payments. This included preventing children overspending on in-game purchases by pre-authorising expenditure and helping SMEs collect payments faster.

“The shared vision for Open Banking payments is to offer customers and merchants a greater choice in how payments are made and received,” said Jana Mackintosh, managing director of payments and innovation at UK Finance. “The recent VRP hackathon demonstrated new and innovative ways Open Banking payments could be used to make it easier to pay tax, make gaming payments, access cash and shop online.

“Open Banking has an exciting future, and the payments industry is working together to consider how the market could be enhanced for customers and merchants.”

Chris Henderson, head of payments and group payment strategy at Tesco Bank said that Open Banking payments are already working for millions of customers, with the potential to “be much more.”

“This report shows how the industry can work together to develop the next phase for Open Banking for the benefit of customers and businesses,” added Henderson.

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