PSR was created as a subsidiary of the Financial Conduct Authority to both stimulate competition and invention in payment systems. Also, it helps to protect the public when using payment systems.
What are Payment Systems?
Payment systems are any system that is used to finalise financial transactions and to move money.
This can include cash substitutes such as technologies, card machines, debit cards and internet banking systems. Therefore, the regulatory framework that is proposed by PSR enables the objectives of PSR to be realised.
PSR Regulatory Framework
The PSR framework is backed by legislation such as the Financial Service (Banking Reform) 2013 which created the PSR and requirements issued by PSR themselves.
The mission statement and objectives of PSR is to make payment systems accessible, reliable and secure for the users. It is also to bring change with the times to payments industries.
What Are the PSR Objectives?
PSR makes sure they work in the interests of the organisations and individuals that use them. The objectives of PSR are:
- To make sure payments systems are operated and developed in a way that promotes the interests of all.
- Promotes the development of payment systems and the infrastructures that operate the systems.
- Promotes effective competition between operators and providers.
How Does PSR Worth With Payment Providers?
PSR make sure that payment service providers have fair access to payment systems and that there is a range of options for individuals using payment services to make transactions.
Management of payment systems is the main cornerstone of PSR to help create and maintain effective competition and evolution of payment market systems.
The Payment Systems Regulator also encourages collaboration with competitors to solve problems and to ensure that the UK benefits from ‘world-leading payment systems, examples of innovation in this area include:
- Digital wallet development.
- Mobile players looking to make payments through contactless card machines.
- Handset manufacturers and online platforms collaborating with care service networks.
- The development of Paym and Zapp.
PSR ensure that individuals can use cash whenever they want or need to and if something goes wrong with a transaction whilst using a payment service they have protections in place.
What Specific Areas are Regulated by PSR?
HR Treasury decides what payment systems are regulated. As a result, PSR can only use the regulatory powers granted to them in relation to specified payments systems. Therefore, the HR Treasure designated the following 8 payments systems for regulation by PSR,
- Cheque and Credit clearing
- Faster Payments
- Northern Ireland Cheque Clearing
What Regulatory Powers Does PSR Have?
PSR have a wide range of regulatory powers that are important in helping to develop the industry as a whole and can be used as mentioned above with the 8 payments systems for regulation granted by the HR Treasury.
These regulatory powers include:
- Giving directions to take actions when needed and to set out standards.
- Imposing requirements in regards to system rules.
- Making operators responsible for providing indirect access to PSP’s.
- Amending any agreements relating to payment systems which may include any fees or charges.
- Investigating behaviours that are not aligned with the standards of PSR.
- Acting on anti-competitor behaviours and alongside the Competitor and Markets Authority.
How Does PSR Monitor Payment Providers?
PSR carry out market reviews to make sure that the objectives they have laid out are being enacted correctly.
Therefore, these reviews are a primary way that PSR investigates payments systems on the market and how well they work for those that use these services.
In addition, PSR takes roughly 12 months to complete and an additional 6 months to propose a plan for any issues that may have been found in the reviews. The PSR regulates 40 billion payments worth over £92 trillion each year.