Terms of Reference – Future of Payments Review
Updated 8 March 2024
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1.Context
Payments are essential to the UK’s economy – to people, to businesses – and are a major source of the UK’s competitive growth, at the heart of a dynamic and changing financial services sector.
The UK was one of the first countries in the world to establish a system for instant payments when it launched Faster Payments in 2008. Today, the UK has a thriving and successful payments market which has been transformed in part by legislation designed to support competition, but also due to wider technological innovation and evolving user preferences. A large and growing number of payment services businesses have entered the market with new technologies, functionalities, and end-user facing services that enrich payment ‘journeys’ and make it is easier than ever before for consumers and businesses to make payments.
Technological innovation continues at pace, and various initiatives – across government, regulators and industry – are underway as the UK looks ahead to the next generation of payments.
The government is committed to supporting an innovative, efficient and resilient payments sector, which fosters competition and serves consumers and businesses well.
2. Objectives
The Future of Payments Review should consider how payments are likely to be made in the future and make recommendations on the steps needed to successfully deliver world leading retail payments, further boosting UK financial technology (‘fintech’) competitiveness.
The Review should look at this primarily through a ‘consumer needs’ lens – consumers in this context means both individuals and businesses making and receiving retail payments - and make recommendations for government, financial services regulators and industry. In making these recommendations, the Review will seek to answer the following three specific questions:
- What are the most important consumer retail payment journeys both today and in the next 5 years? E.g. 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 vs other leading countries? This is to be assessed for the quality of experience and security as well as 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?
3. Scope
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
As part of this, the Review may consider the steps needed to build from the Joint Regulatory Oversight Committee’s report on the future of Open Banking to drive uptake in retail account-to-account payments, that is, payments directly from a bank account without using a debit or credit card.
The Review should take into account developments in the UK payments industry’s New Payments Architecture (NPA), which is being procured by Pay.UK, and may make recommendations building from (not replacing) NPA plans.
The Review will seek input from market participants, and government and regulators may also be consulted.
4. Governance
The Review is being conducted on an independent basis. It will be chaired by Joe Garner, with HM Treasury providing the secretariat.
The Chair will provide a report and recommendations to the government in Autumn 2023.