Britain's payments infrastructure needs to undergo reform in order to boost competition and to better meet consumer needs, the country’s payment regulator said.
Payment Systems Regulator (PSR) made statement as it unveiled the final conclusions of its market review into the ownership and competitiveness of the infrastructure that supports three payment systems – Bacs, Faster Payments Service and LINK.
The watchdog said it found no effective competition for the provision of UK payments infrastructure for these three payment systems.
The regulator made series of recommendation, including adopting a common international messaging standard and creating a procurement process designing around consumer needs.
In addition, PSR identified the common ownership and control of both the payment systems and the infrastructure provider as a key concern.
In order to open up the market and allow for more effective competition and innovation, the regulator is proposing that the four largest banks that have common control of the payment system operators and the infrastructure provider should sell all or part of their stakes in VocaLink – recently bought by MasterCard.
PSR managing director Hannah Nixon said: “At present, common ownership and control remains a key issue. However, the recent news that MasterCard intends to buy VocaLink could address the issues we have identified.
“It will be for the relevant authority to consider the effects of this merger under merger control law, but the fact that discussions are taking place about ownership, and changes are being made, is an encouraging sign.
“In the meantime, we must not lose sight of the other issues that are causing concern. The problem runs deeper than just the ownership of the infrastructure provider and we will want to see further changes in the market if competition is to be effective.”