Payments regulation to reach further in future

The Treasury has set out its vision for the future of payments in the UK. The conclusion of its Payments Landscape Review identifies four priority areas covering Faster Payments, Open Banking, cross-border payments and the regulatory framework.

One of the ways it intends to “future-proof” the regulation of payments is by looking again at who is involved in payment chains. The days where banks and payment systems coordinate payments as a closed shop are no more. The game has changed as payments have gone digital, and not all the new players are regulated.

In response, the Treasury plans to consult on bringing “systemically important firms in payments chains” under the supervision of the Bank of England. It remains to be seen how widely the net is cast but it could capture, for example, currently unregulated tech companies which have become integral to making payment transactions happen.

This is another example of how the scope of payments regulation is extending its reach. Others include the UK’s plans to regulate stablecoins and buy-now pay-later, to oversee cloud providers serving the financial sector, and to restrict how crypto-assets are promoted. The FCA has also called on online platforms to do more to tackle scams, such as authorised push payment fraud.