On 9 April 2024, the Payment Systems Regulator (PSR) published its Annual Plan for 2024/2025, setting out the PSR’s key aims, activities and expected costs for 2024/2025.

The Annual Plan highlights that this year (the third of the PSR’s 5-year strategy) will be a important one for consolidating the delivery of the PSR’s work aimed at improving payments for people and businesses across the UK. It notes the significant progress already made against the PSR’s strategic priorities and explains that the focus is now on ensuring the regulator’s policies and requirements are implemented effectively. The PSR states that the action it is taking this year will lead to greater protections for consumers and increase competition and choice in payments for businesses.

In the Annual Plan, the PSR outlines the actions it is committed to taking this year in order to deliver against its 4 primary strategic priorities: protection, competition, unlocking account-to-account payments, and access and choice. It notes that the priorities align with the statutory objectives of the PSR, which are to:

  • Ensure that payment systems are operated and developed in a way that considers and promotes the interests of all the businesses and consumers that use them.
  • Promote the effective competition in the markets for payment and services between operators, payment service providers and infrastructure providers.
  • Promote the development of and innovation in payment systems, in particular the infrastructure used to operate those systems.

Protection

The PSR is working to ensure the industry is ready to implement its reimbursement requirements for authorised push payment (APP) fraud, which will sit alongside the PSR’s work on making fraud data for payment service providers (PSPs) visible with the aim of helping people make informed choices based on their provider’s performance. The PSR also confirms that it will work with PSPs to ensure their readiness for the expansion of Confirmation of Payee coverage from October 2024.  

Competition

The PSR’s market reviews on card fees are looking at the competition between Mastercard and Visa within card payments, as this impacts the costs faced by merchants. In 2024/2025, the PSR will share its conclusions through publishing the:

  • Final report on its cross border interchange fees market review. If the PSR concludes that it needs to intervene in the market, it will consult on remedies and implementation.
  • Interim and final reports on its card scheme and processing fees market review. If the PSR determines that the market does not function well, it will consult on remedies.

Unlocking account-to-account payments

The PSR explains that it wants account-to-account payments to give people and businesses more choice about how they make and accept payments. As co-Chair of the Joint Regulatory Oversight Committee, the PSR states that it will continue to:

  • Clarify the future regulation of open banking, to ensure it operates in the interests of all service users.
  • Decide on the changes needed, including any necessary directions and rule changes, to enable the phased expansion of variable recurring payments to begin.
  • Engage with stakeholders to understand what support consumers and businesses need to regularly adopt account-to-account payments to retail purchases, and liaise with the key organisations to encourage this.
  • Continue its focus on ensuring that the next generation of payments infrastructure for account-to-account payments provides improvements in fraud detection and access, as well as better supporting enhanced competition.

Access and choice

As regulator of the LINK network, the PSR notes that it works to ensure access to cash and has been exploring barriers people face when using digital payments so that it understands the challenges and can help more people access a wider range of payment methods. It confirms that it intends to:

  • Review the effectiveness of Specific Direction 12 in maintaining access to free-to-use cash machines through the LINK network.
  • Publish its research on the barriers consumers face in using digital payments.
  • Set out how it intends to support the take up of digital payment methods.
  • Work alongside PSPs and consumer groups to ensure its ongoing work on tackling APP fraud and account-to-account payments reduces barriers to digital payment use by increasing trust and control for users.

The Annual Plan then highlights the importance of the PSR working with others, to ensure effective engagement and understand payment user experiences first hand. This includes working closely with the Bank of England, the Financial Conduct Authority and the Prudential Regulation Authority.  

2024/2025 Budget

The PSR’s budget for 2024/2025, is £28.0 million. This constitutes an increase from its 2023/2024 budget, reflecting its higher operating costs from 1 April 2024 to 31 March 2025, due to the PSR’s expanded workforce.