Payments in the UK and Europe could look very different a few years from now to how they appear today, with two recent announcements set to have a transformative effect on the industry.
In the UK, the Payments Strategy Forum, a body of experts established by the Payment Systems Regulator (PSR), published its final strategy for overhauling the payments system and prioritizing the needs of consumers.
There are two key proposals at the heart of the plans. The ‘confirmation of payee’ safeguard is designed to help prevent financial fraud by ensuring that the identity of the payment recipient is confirmed with the payer before any funds leave their account.
The second measure is the ‘request to pay’ function, which will allow customers to authorize a regular payment – such as a utility bill – before the company takes the money out of their account.
Another proposal relates to the consolidation of three retail payment systems operating in the UK: Bacs, Cheque and Credit Clearing Company and the Faster Payments Scheme.
Hannah Nixon, managing director of the PSR, said: “The payments industry, including the technology, infrastructure and services offered to users, is going through the type of wholesale change that is only seen once in a generation.”
In Brussels, meanwhile, the European Payments Council (EPC) published the first rulebook for the Single Euro Payments Area Instant Credit Transfer (SCT Inst) scheme. The optional scheme will allow payment service providers (PSPs) to complete transfers of up to €15,000 (US$16,150) in less than ten seconds, across 34 European countries.
SCT Inst transactions are due to begin in November 2017, giving those PSPs that choose to take part one year to implement the new system.
Javier Santamaria, chair of the EPC, said: “The launch of the SCT Inst scheme illustrates that we have entered a new era in payments, based on speed and innovation.”
The prevailing theme of these announcements is delivering the best possible service to the consumer – in terms of speed, convenience and security. Financial institutions now face the challenge of keeping up with these new demands and staying relevant in an increasingly competitive, rapidly evolving marketplace.