The UK government is planning to put supervision of MasterCard and Visa alongside the UK’s main interbank payment systems under the remit of the new Payment Systems Regulator (PSR), which has been tasked with promoting competition within the payments industry.
Major payment networks such as Visa and MasterCard, interbank systems such as Bacs, CHAPS, Faster Payments, Link and the cheque clearing system will be among the main payment systems that the government is proposing to bring under the scope of the PSR.
In 2013 the government announced the creation of the PSR in order to deal with competition and innovation in the payments sector. As of April 2015, the PSR will have the authority to ensure that UK payment systems do not hinder competition, and will also ensure competitors such as small banks and payments firms to have access to these systems on fair terms. The PSR will also have the power to order the owners of the dominant systems to break them up or sell them.
The government is consulting on its proposal to designate the systems for four weeks, after which it will make its final decision, with the regulation coming into effect by 1 April 2015. According to the UK’s Economic Secretary to the Treasury, Andrea Leadsom, 92% of credit and charge card transactions and 100% of debit card transactions in the UK are made through Visa or MasterCard.
Leadsom says: “An open and transparent payments system is crucial to give new players freedom to challenge the big banks without unfair barriers, and encourage new, innovative ways for customers to make payments. [The] consultation is an important step along the road to a more competitive banking sector focused on each and every user of financial services.”
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