The newly formed Payments Strategy Forum has announced its 21-strong membership.
Whilst this topic has been of interest to the Social Market Foundation for some time, having spoken to many people across the policy making and political world, I’ve come to the conclusion that this is not likely to be big news. But before you stop reading, consider how fundamental a role this group of 20-odd people has in shaping our economy and society.
Payment systems matter. The interbank (e.g. CHAPS, BACS, Faster Payments) and card (e.g. VISA, MasterCard) payment systems that collectively make up the UK’s payment system, are the foundation on which our economy transacts. They are how we get paid, pay our mortgage, transfer money, invest, buy goods and services online and engage in an endless list of other day-to-day transactions we tend to take for granted.
This means that there a few things more fundamental to the day-to-day lives of UK consumers and businesses and, how they develop should matter to all of us. But away from the interest and eyes of policy makers, consumers and businesses, the system has been run with too little focus on the needs of those who use them. And the potential impacts of getting it wrong are clear, with the abortive attempt to remove cheque clearing functionality from the UK economy an obvious example.
But, more than this, they are also at the heart of both competition in the retail banking market and opening up a world of cashless transactions and digital innovation. Here, innovation has, at times, been glacial and with complex ownership structures between schemes, the banks and infrastructure providers, there has been a lingering suspicion that the system has been run to protect incumbents, rather than meet users’ needs.
Thankfully the introduction of the Payment Systems Regulator has seen a step change in the approach to payment systems and its policy statement is encouraging. It must now ensure that it moves quickly to roll out requirements, including reporting requirements on sponsor banks, as laid out in our recent report, Playing the Field. But if the sector is going to be revolutionised, it will need to focus on the much longer term and, here, the Strategy Forum provides a vital opportunity for the industry to re-focus on the needs of consumers and business.
And that is how the newly established Strategy Forum will be assessed: on whether it can quickly deliver tangible benefits to consumers and businesses across the UK. Success in doing so could drive innovation, boost growth and open up new ways of transacting, managing finances and doing business for everyone in the UK.
With such high stakes, the Regulator and Forum must act quickly to show they are up to the job.