Future of Payments Review

The Future of Payments Review, authored by Joe Garner, was published in November 2023 as part of the Autumn Statement. The report provides a number of recommendations to delivering a world leading retail payments ecosystem. 

The review focused on how people pay for goods and services at the point of sale instore and ecommerce, and also person-to-person payments. Cash, corporates, crypto, and BNPL are out of scope.  

The report concludes the UK payments landscape is in a good position, with a long track record of security, reliability and resilience, and a leader on innovation in areas such as real time payments and Open Banking.  

However, multiple ongoing major initiatives, including Open Banking, New Payments Architecture and Central Bank Digital Currency, mean the UK’s payment landscape is lacking ‘a North Star’, with no clear or agreed vision of what they aim to achieve in aggregate.  

Therefore, the strongest recommendation is that Government develops a National Payments Vision and Strategy, with the primary aim of simplifying the landscape, and high-level guidance on key priorities, so regulators and industry can align on their delivery.  

Consumer experience is quick, easy, free and reliable but with scope to improve: 

• Purchasing payment experience from a consumer point of view, both in-person and online, is one of the best in the world.  
• Attributed to a mature banking, cards, and digital wallets environment.  
• Recommend moving SCA requirements from detailed technical standards to an outcomes-based approach to improve consumer shopping experience.  

Open Banking has benefits for consumers and businesses, and progress should be accelerated: 

• Merchants and retailers are frustrated by costs of card payments and the lack of viable alternatives.  
• The report says that although there is some evidence that card costs to merchants have increased, no data indicated costs are out of line with relevant international comparators.  
• The absence of an alternative payment method is a key driver of dissatisfaction.  
• Acknowledging strong merchant frustration, the report recommends the PSR completes card fees investigation.  
• Regardless of this outcome, the report recommends improving the UK bank transfer payment process, primarily focusing on Open Banking, to provide an alternative to card payments for businesses, and improve person-to-person payments.  
• Must enhance consumer protection, not necessarily to the same level of cards, but with minimum form of dispute resolution to drive adoption, and adjust the commercial model to ensure sustainability. 

Regulatory coordination would further improve payments environment: 

• The UK benefits from a well-developed regulatory environment and is unique in having dedicated payment systems regulator. 
• The landscape is very complex with multiple industry and regulatory bodies –creation of National Payments Vision and Strategy will improve alignment and prioritisation.   

Tackling fraud and scams: 

• Half of respondents raised fraud as an issue, and half of those raised concerns regarding Authorised Push Payment fraud rules and the possible adverse outcomes, such as increased friction in payments resulting in abandoned checkouts. 
• Recommends PSR to assess the costs and benefits of the new APP fraud rules 12 months after implementation. More broadly, Government to set a more ambitious fraud crime reduction target beyond 2024, with a focus on preventing fraud and scams in the first instance.  

Government engagement with Big Tech: 

• Technology, and Big Tech in particular, are redefining payments and financial services more broadly e.g. rapid adoption of digital wallets. 
• Government should take a more coordinated approach to engagement on high priority issues relating to Big Tech.