The UK Government has launched an independent review into the future of payments.

What is the review?

According to its terms of reference, the review, which will be chaired by Joe Garner, will consider how payments are likely to be made in the future and recommend the steps needed to successfully deliver world-leading retail payments, further boosting UK fintech competitiveness. As with many of the recent publications we have seen from the Government, and from regulators such as the FCA, the review is looking at payments from a consumer perspective. Consumers in this context include both individuals and businesses making and receiving retail payments.

The terms of reference acknowledge that technological innovation is continuing at pace and emphasise that the Government is committed to supporting an innovative, efficient and resilient payments sector which fosters competition and serves consumers and businesses well.

Call for input

Stakeholders are invited to provide views on the following questions:

• What are the most important consumer retail payment journeys both today and in the next five years? For example, paying a friend, paying a bill, paying businesses for goods and services, in the UK or internationally, etc.
• For these journeys today, how does the UK consumer experience for individuals and businesses compare versus other leading countries? For example, the quality of experience, security or cost.
• Looking at the in-flight plans and initiatives across the payments landscape, how likely are they to deliver world leading payment journeys for UK consumers? For example, the review welcomes suggestions that would support, or are essential to delivering, world-leading payments for UK consumers.

In answering these questions, the review is asked to consider how the UK’s retail payment systems and networks need to evolve to:

• catalyse innovation in payment services
• serve the future retail payments needs of businesses and consumers (the review is focused on retail payments and is not considering Real Time Gross Settlement (RTGS) and CHAPS systems used for wholesale payments)
• support interoperability with new forms of digital money, including insofar as the role of banks is concerned (the review is not considering stablecoins or central bank digital currency policy)
• support interoperability with global payment systems
• ensure accessible and inclusive digital payments
• ensure resilient and secure payments

The call for input closes on 1 September 2023. In autumn 2023 the Chair will provide a report and recommendations to the Government.

What messages can we take from this review?

The review itself does not contain any proposed changes to payment regulation. However, it does provide an insight into the Government's key areas of focus when it comes to payments. These key areas include:

• An increasing focus on retail customers in the payments space, an area which has received substantial focus as part of the FCA's Consumer Duty rules (which come into force for new and open products at the end of this month).
• The need to ensure consumers are adequately protected when they make payments, alongside a desire for the UK to be a market that is world leading in the fintech and payments sectors.
• An awareness that the world of payments is changing rapidly with the introduction of new players and new methods of making payments.
• A general desire to review and change the current UK payments regulatory framework. This is a trend already set in motion by the government's review of the Payment Services Regulations 2017 and a similar phenomenon is happening in the EU with the publication of the PSD3 proposals.

Payments firms can expect the increasing focus on protecting retail customers to continue. They can also expect the regulatory landscape to shift as the Government considers feedback on this paper and others and determines the extent to which requirements currently placed on payments firms need to change.