Unlike some initiatives, the UK’s strategy isn’t focused solely on new payments infrastructure. It also includes parallel initiatives to improve trust in the payments system by collaboratively working to prevent financial crime.
In 2017, the Payments Strategy Forum (established in 2015 by the Payment Systems Regulator) published a blueprint for the future of UK payments. The blueprint recommended a layered architecture with a thin collaborative infrastructure to enable competition and innovation. Adoption of international standards (including ISO 20022) is also part of the plan. By the end of the year, initiatives proposed by the Forum were passed to the New Payments System Operator (NPSO) and UK Finance, which now continue the work.
The New Payments Platform (NPP) program, launched in June 2013, brings together 13 financial institutions. Their goal is to deliver a leading payments infrastructure that meets the needs of modern consumers.
The NPP is currently introducing a real-time payments capability, a more flexible payments architecture, enriched payments data and PayID — a feature that allows users to identify the recipient using memorable information, such as a mobile phone number.
NPP implementation will be incremental throughout 2018, with real-time payments one of the early features. End-user access to the platform will continue to grow as bank and PSP adoption increases.
Canada is often recognized as a leader in payment services. However, like many other developed payments infrastructures, it uses legacy systems that have become outdated. To respond, the Canadian Payments Association (CPA) has published plans to modernize Canada’s payments industry.
The CPA’s modernization strategy will be implemented over several years, with completion planned for 2020. The strategy includes five pillars:
- New core clearing and settlement system
- Real-time payments capability
- Enhanced automated funds transfer
- Alignment of the Automated Clearing Settlement System with global regulatory standards
- Modernization of the rules framework
Unlike the UK, Australia and Canada, cash is the most popular way for individuals to pay in Singapore. Recognizing this, the Monetary Authority of Singapore (MAS) is encouraging adoption of its real-time payments platform, Fast and Secure Transfers (FAST), which is at the heart of its Smart Nation vision.
Singapore’s Smart Nation payments strategy is part of a wider government initiative to foster innovation across all sectors and improve standards of living in Singapore. In addition to wide adoption of electronic, real-time payments, the payments vision also fosters competition and interoperability and encourages efficiency and security and an enhanced, standardized consumer experience.
In September 2017, the Hong Kong Monetary Authority (HKMA) announced A New Era of Smart Banking, a vision of an efficient, flexible and safe payments industry, founded on a convergence of banking and technology.
The plan’s first initiative focuses on executing real-time payments, expected to be delivered in September 2018 through the Faster Payment System. Six subsequent initiatives focus on fostering innovation and competition, developing technological capabilities, and reducing friction between regulation and digital offerings.
The EU’s regulatory agenda is transforming the European payments industry. PSPs are being asked to comply with several overlapping and sometimes parallel regulations, such as the General Data Protection Regulation.
In January 2016, the EU published the most substantial payments legislation of recent years — the second Payment Services Directive (PSD2). PSD2 has a greater focus on promoting the development of innovative electronic payments solutions by creating a “level playing field” for new entrants into the market.
PSD2 will require banks to share customer data with third-party providers, rebalancing the power between new entrants to the industry and bank incumbents. The competitive landscape will be transformed, consumers will be offered more choice and convenience, and innovation will be key to competitive success.
The deadline for European Economic Area (EEA) countries to transpose PSD2 into domestic law was January 2018, but implementation is inconsistent. Although these EU directives aim to promote a single, innovative payments market across Europe, the reality of the EU and EEA as an alliance of autonomous nations remains a challenge.