Jana Mackintosh is Managing Director for Payments and Innovation at UK Finance. She is experienced in competition and regulatory policy, having worked across a number of public and private sector organisations in several markets.

In this interview, first published by the European Payments Council, we interviewed Jana to know more about payments in the UK.

First, what are the current main features of the UK payment landscape and what have been the main changes over the last five years?

The UK payments landscape has changed dramatically over the last decade.

Ten years ago, cash was the most common payment type, with over twice as many payments as debit cards. The use of cash is now in decline and debit card payments (including digital wallets) account for most spontaneous payments.

UK consumers and businesses still rely heavily on direct debits (pull payments) for many regular payments.

In recent years, there has been a steady increase in the use of faster payments (bank to bank push payments) and given the regulatory appetite to encourage the use of account-to-account payments this is expected to grow further.

A notable piece of work during the last five years has been the development and enactment of plans to upgrade the retail and wholesale payments infrastructure.

Over the next two years the Bank of England upgraded RTGS system will go live, as will the New Payments Architecture (NPA).

Both will work on ISO200022 standards and the NPA will offer new payment types, including ‘instant’ that could be used for point-of-sale transactions, as well enhanced overlay services, such confirmation of payee and request to pay.

UK consumers and businesses are now comfortable using and accepting a wide variety of forms of digital payments. Industry and government have also put in place various measures to ensure access to cash for those that need it.

Could you tell us more about Confirmation of Payee (CoP) and developments around Authorised Push Payment (APP) fraud in the UK?

Launched in 2020 by Pay.UK, CoP is a name checking service for UK-based payments. It has now been successfully implemented by 30+ UK banks, building societies and other payment service providers
(PSPs).

The aim of the service is to reduce certain types of fraud as well as misdirected payments.

CoP was never intended to be the silver bullet to Authorised Push Payment (APP) Fraud. However, it has quickly become an embedded function that customers see when making a new payment or amending an existing one.

Today, CoP covers over 90% of transactions made via Faster Payments, by October 2024 full market coverage is expected.

In late 2022, the Payment Systems Regulator (PSR) consulted on new measures to protect people from fraud by giving PSPs good incentives to prevent scams, and making sure victims get their money back.

How is Open Banking expected to evolve in the UK?

2023 has the potential to be a milestone year for Open Banking.

Following on from the Strategic Working Group’s (SWG) “sprints”, we are expecting the regulators to issue their vision and roadmap in Q1 2023.

We expect this to cover key themes including bridging ecosystem gaps, unlocking the potential of Open Banking payments, potential further data-sharing propositions, and how to put the development of Open Banking on a more sustainable footing.

UK Finance is looking forward to engaging with the industry on these themes, and the issues underpinning them, such as the wider vision for Open Banking and the functioning of the future entity.

Three years after Brexit how does the UK position itself in Single Euro Payments Area (SEPA)?

The UK is committed to retaining SEPA access and maintaining functional equivalence.

Following Brexit, the regulatory framework in the UK is being reviewed, as is the Payment Services Directive in Europe, and will be transposed into the domestic rulebooks.

As a result, there may be some evolution and perhaps areas of divergence.

UK Finance is working with members and key European stakeholders such as the European Payments Council to ensure coordination and balance, whilst finding solutions that work for all parties without compromising participation in SEPA.

Finally, how do you see the UK’s payment and regulatory landscape developing over the next five years?

Many of the themes present in the European payments landscape are also prevalent in the UK. Key topics that we expect to work on with our members include:

• Further activity to enhance open banking and open finance, and in connection with this a greater focus on account-to-account payments for retail.
• New forms of digital money, including stablecoins, which are being brought within the scope of payments legislation, and a potential retail central bank digital currency (CBDC).
• Further work around embedded finance and embedded payments.
• Finalisation of the New Payments Architecture and the development of further products and services, for example fraud data sharing enabled by common standards.
• Implementation of Consumer Duty, a new cross cutting principle which requires firms to act to deliver good customer outcomes.
• Increased use of Buy Now Pay Later services.
• The use and impact of digital identity solutions within financial services.
• Environmental, Social and Governance (ESG) and environmental impacts of payments.
• Fraud, anti-money laundering (AML) and security.
• Liquidity optimisation and effective cross-border payments.

This interview was first published in the European Payments Council newsletter

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