National Payments Vision and Strategy: The future of UK payments
- Dougie Belmore
The Garner Report
The UK payments sector is at an inflection point.
His Majesty’s Treasury (HMT) last year commissioned an independent report to consider the future of UK payments. Led by Joe Garner, former CEO of Nationwide Building Society and HSBC UK, the Future of Payments Review was published in November 2023. The report takes stock of payments journeys for individuals and businesses in the UK and evaluates these against our international counterparts, finding much success in the current payments landscape. This includes: very high levels of security, reliability and resilience; a relatively mature banking, cards and digital wallets environment; a well-developed regulatory framework; the establishment of generally real-time bank transfers; and the success and rapid growth of Open Banking.
The report also highlights that there are a number of major change initiatives now underway in UK payments, which all make sense individually, but do not appear aligned to a clear vision in aggregate. It also acknowledges that many parties across the payments ecosystem are frustrated that the pace of change has been slower than intended.
The primary recommendation of the report was that the UK Government develops a National Payments Vision and Strategy (NPVS) to help unify the domestic payments sector behind a shared strategic purpose. This should also have the aim of simplifying the landscape over time. The Government has welcomed the core recommendation for the NPVS and expects to release such a lodestar later this year.
The role of Pay.UK
Pay.UK runs the UK’s retail interbank payment systems, ensuring trust in bank payments and enabling billions of pounds of payments to be made safely and securely, every day. We have a proud track record of delivering innovative products and services. This includes the Faster Payment System and Confirmation of Payee, which have supported the UK economy and served as models internationally. At present, however, Open Banking, digital transformation, increased rates of fraud, higher consumer expectations and evolving social attitudes all demand accelerated change to the payments ecosystem we support.
We have been leading the UK banking and payment sector’s programme of large-scale infrastructure renewal, the NPA, and have paused this while we await confirmation of strategic direction from HMT. We are also currently working with organisations across the payments community to deliver fraud detection, prevention and reimbursement tools. This work embraces the principles of innovation and competition to drive real benefits for consumers and businesses.
Our emerging thinking on a national payment strategy
We are contributing to the cross-sector effort to assist HMT in articulating a broadly supported NPVS. We are closely engaged with the participants in our payments ecosystem, including banks and fintechs, and with our regulators and government. We are taking the opportunity to reflect on the factors that have affected the design and delivery of change so far, and how these can be solved. We are also inputting into the Government’s strategic work, helping to build a unified payments strategy which takes account of – and can facilitate – both the resilience and the perpetual innovation which we expect to be a permanent feature of UK payments going forward.
We believe it is crucial that the UK’s payments strategy starts with the outcomes payments users need: certainty, convenience, choice and control. To deliver these outcomes, we need renewal of our interbank payment systems, to provide the right platform for the future by: implementing international payments standards; enabling real-time capabilities for all payments; acting as an open platform that third-party firms can innovate on top of – safely – to meet payment user needs; and connecting to and smoothly interoperating with new kinds of payments like a potential digital pound, regulated stablecoins and other payments tokens, keeping pace with the features and functionalities that these payment types may come to enable.
This is an exciting time in payments. There is considerable potential for the right national payments strategy to help establish a roadmap to harness the sophistication, innovation and ingenuity seen across the UK banking and payments sector. The NPVS presents a timely opportunity to ensure the UK remains at the cutting edge of payments innovation, supporting individuals, businesses and the whole economy over the next generation of payments success, and ensuring that interbank payments continue to be the smartest way to move money, now and in the future.
You can follow the latest developments on the NPVS here and if you have any questions or ideas please contact John Mowat at Pay.UK ([email protected]), who will be delighted to help.