Open Banking ecosystem reacts to UK government’s National Payments Vision

The UK government’s National Payments Vision recognises the “vital role” of Open Banking in delivering account-to-account payments and provides a “North Star” for regulators and the industry to “catalyse a world-leading UK payments ecosystem”, according to reaction from across the ecosystem.

The government set out its overarching Vision for “a trusted, world-leading payments ecosystem delivered on next generation technology, where consumers and businesses have a choice of payment methods to meet their needs”.

To that end, it said that it considers “unlocking Open Banking enabled account-to-account payments for e-commerce to be a strategic short to medium term priority” and that “it is the government’s ambition… that seamless account-to-account payments are developed as a ubiquitous payment method”.

The government has asked the Financial Conduct Authority (FCA) to be “the UK’s regulator for Open Banking”, on the basis that “having a single authority leading the regulation of Open Banking overall will help ensure coherence between the approach to Open Banking payment initiation and data sharing”.

“The FCA will also be well placed to consider potential interoperability between Open Banking and other Smart Data schemes, given the government’s intention for this Open Banking framework to lay the foundations for Open Finance,” the National Payments Vision states.

The government also announced it has established a Payments Vision Delivery Committee, which will task the Bank of England and the Payment Systems Regulator (PSR) to “examine and refresh” the requirements for the UK’s retail infrastructure.

The industry reacts

Charlotte Crosswell, chair of CFIT, who attended the Chancellor’s Mansion House speech last night (14 November), wrote on LinkedIn: “A key headline from last night is the announcement of a new National Payments Vision: a roadmap for creating a secure, innovative, and competitive payments sector, which will involve ‘decisive action’ to progress Open Banking, Open Finance and Smart Data, all of which will now fall under the regulatory leadership of the Financial Conduct Authority.

“This will strengthen the foundations of today’s ecosystem and steer future activity to drive innovation, facilitate competition and ensure security.”

Charles Damen, chief product officer at Token.io, said: “Token.io welcomes the UK government’s National Payments Vision (NPV), which recognises the vital role of Open Banking in delivering seamless A2A payments that will drive competition and ensure consumers and businesses have a genuine choice of payment methods to meet their needs.”

Damen added: “We strongly agree there is a significant opportunity to further develop account-to-account payments in the UK in support of enabling greater choice in how consumers pay digitally for goods and services in shops and online.

“Therefore, we share the government’s ambition to establish A2A payments as a ubiquitous payment method, and applaud its decision to make unlocking Open Banking-enabled A2A payments for e-commerce a strategic short- to medium-term priority.”

Janine Hirt, chief executive officer of Innovate Finance, said the NPV “provides a North Star for government, regulators and industry to catalyse a world-leading UK payments ecosystem based on competition, innovation and choice” and that its “commitment to scaling Open Banking payments in e-commerce” should provide further confidence for investors and innovators.

Francesco Simoneschi, co-founder and chief executive officer of TrueLayer, said the “significant” focus on Open Banking and account-to-account payments “is a major step toward modernising the UK’s payment infrastructure”.

“Like water, roads and gas, payments are essential to the economy. Offering alternatives to outdated card systems will drive cost savings and growth for businesses, while enhancing convenience and security for consumers. Now the Vision is published, we look forward to a period of accelerated delivery,” Simoneschi added.

NatWest’s chief payments officer Mark Brant called the NPV an “opportunity to have a clear roadmap for payments in the UK that is forward looking, realistic and enables the industry to focus resource where it will have the most impact”.

“The steps that the government has outlined will help unlock growth in the UK economy, ensuring the UK’s global lead is not eroded by a complex regulatory change agenda which inhibits firms from providing innovative services that meet their duty to deliver good outcomes for customers,” he said.

Regulatory ‘congestion’

In the Vision, the government revealed it had issued “a first of its kind payments remit letter” jointly to the FCA and PSR, providing recommendations relating to its priorities for the UK’s payments sector, with one of the priorities outlined in the letter “enhancing coordination to address congestion in the regulatory landscape”.

On LinkedIn, Tom Burton, director of external affairs and public policy at GoCardless, wrote: “JROC has played a valuable role, but the streamlining of regulatory remits with the FCA taking sole charge of Open Banking in future is the right call.

“That said, another committee is being created – the Payments Vision Delivery Committee. This will mainly focus on assessing retail payments infrastructure. There will be a mad scramble to join the Vision Engagement Group supporting it.”

Alex Reddish, head of market expansion and GTM strategy at Tribe Payments, said of the government’s decision to appoint the FCA as the regulator of Open Banking: “It’s a bold move that signals frustration with the pace of progress but also offers hope for more decisive leadership and greater collaboration between the public and private sectors.

“The UK was a trailblazer in Open Banking, but progress has significantly stalled in recent years. With the FCA at the helm, we need swift agreement on sustainable commercial models to reignite innovation and cement the UK’s status as a global leader.”

“The government’s National Payments Vision is hugely welcome, and rightfully identifies the role that Open Banking payments play in driving innovation and fostering competition in payments,” said Marion King, chair and trustee of Open Banking Limited.

She called on the industry to “seize the opportunities before us to move Open Banking to a sustainable, commercial model, and further solidify Open Banking’s position in our increasingly digitalised and diverse payments landscape”.

“We look forward to working with government and regulators to make this a reality and stand ready to support the new Payments Vision Delivery Committee,” King added.

International inspiration

The government said that having looked “across the globe to countries such as Sweden and Brazil”, it is clear “there is far greater potential and innovation that can now be harnessed from account-to-account payments”, referring to ‘Swish’ payments in Sweden and Brazil’s ‘Pix’ payments, respectively.

“For customers, this could translate into the paying for goods or services in a shop or online via mobile phone numbers or QR codes. For merchants, they may potentially benefit from cost savings driven by having a wider variety of payment options,” the government stated.

It identified the UK’s “pioneering” fintech sector as being “ideally placed” to deliver “the next wave of innovation in payments, making the most of better and more innovative account-to-account payments infrastructure in the UK”.

Further reading: It’s time for a bold transformation in UK payments