The Financial Services (Banking Reform) Act 2013 created a new regulator for retail payment systems in the UK: the Payment Systems Regulator. The PSR is a subsidiary of the Financial Conduct Authority; it will be fully operational from 1 April 2015; and it will oversee the UK payment systems designated by HM Treasury.

For these purposes:

  • A payment system is: “a system which is operated by one or more persons in the course of business for the purpose of enabling persons to make transfers of funds, and includes a system which is designed to facilitate the transfer of funds using another payment system”; and
  • HM Treasury can only designate a payment system if it’s satisfied that: “any deficiencies in the design of the system, or any disruption of its operation, would be likely to have serious consequences for those who use, or are likely to use, the services provided by the system”.

In its 2014 consultation, “Designation of payment systems for regulation by the Payment Systems Regulator”, HM Treasury proposed to designate: Bacs; CHAPS; Faster Payments; LINK; Cheque & Credit; Northern Ireland Clearing; Visa; and MasterCard.

Few will be surprised to learn that, on 18 March 2015, HM Treasury confirmed that it had decided (a) to designate each of these systems; and (b) not to designate American Express, Diners Club, PayPal, Paym, Zapp, M-Pesa or Google Wallet. HM Treasury has the power, under the 2013 Act, to change the designations. We can almost certainly expect it to use that power at some stage in the future.