Overhauling UK Payments by 2020 – Should you care?Nizam Yusuf
A Quick Overview of the Innovation in UK Payments
Bacs, Direct Debit, Faster Payments, Chaps and Cheques
In the UK today, we use various payments and collections systems to pay for goods and services incurred. As times change, and consumer and business needs evolve, payment systems once well suited to their function require innovation to ensure they continue to meet user requirements for years to come.
To meet the requirements of twenty-first century consumers and businesses, The Payments Strategy Forum has launched a new strategy aimed at overhauling the UK’s payment systems, with a target date set for 2020.
What is the Payments Strategy Forum?
Created by the Payments Systems Regulator (PSR), The Payments Strategy Forum (the Forum) was formed in 2015 – members include; payments companies, banking & financial services sector representatives, FinTechs (financial technology companies) as well as consumer groups and non-governmental bodies – to develop a strategy for payment systems in the United Kingdom.
The Forum’s aim was to work together in partnership to drive collaborative innovation in payment systems and to develop a payments strategy which reflects the needs of all users.
On 29th November 2016, the Forum launched the ‘Payments Strategy for the 21st Century‘ – a final proposal, which they believe will transform the way consumers and businesses make payments in the future.
Why the change?
The payments systems that we use day-in-day-out are essential to how well the UK economy runs.
Having formed over decades of variable customer requirements, today we have a smorgasbord of payment systems that process payments over five days, as well as ones that take less than a few minutes.
With these unnecessarily complex and somewhat idiosyncratic payments systems in place, radical changes and innovation is required to existing payment systems, to ensure future generation needs will continue to be met.
With millennials and agile start-ups itching for better payment systems, changes to the UK Payments system are inevitable.
What can you expect?
The Forum’s recent strategy publication has responded to the needs of consumers and businesses, by providing a breakdown of how UK Payments will evolve in years to come. Plans announced by the Forum, include;
- Initiatives that will help tackle financial crime, to provide safer and more secure payments and banking processes,
- Control and assurance measures for when payments and collections are processed
- Opportunities for challenger banks and FinTechs – such as AccessPay – to compete with large banking and financial services institutions to meet the needs of service-users of tomorrow.
Here at AccessPay, we believe the initiatives announced by the Forum will help provide;
- a secure and resilient payments system to meet new world threats,
- a system that is modelled on user-requirements and not on deliverability of funds
- And fundamentally, a landscape that encourages innovation and competition.
Why should finance professionals care?
With responsibility for payroll, accounts payable and the collection of payments, finance professionals need to ensure they are aware of the changes taking place in the evolving UK payments industry.
Changes to payments systems that you have come to know and love (or hate), possible changes to payments software that you have familiarised yourself with over the years and the introduction of new payment methods that you will have to learn from scratch – they are all going to affect the way you process business payments.
With the Forum now working towards implementing these changes over the next three years, Financial professionals will need to keep up-to-date and take active interest in what changes are being brought about.