On July 21, 2016, the PSR published its final report on its market review into the supply of indirect access to payment systems. Banks, building societies and other payment service providers rely on payment systems to transfer money between accounts. The PSR commented that provision of access to payment systems is essential in enabling effective supervision of and innovation in payments. Indirect access to payment systems occurs when one payment service provider relies on another payment service provider to provide access. The PSR’s final conclusions remain largely unchanged from its interim report.

The PSR concluded that generally, competition in the supply of indirect access appears to be producing some good outcomes. For example, large indirect payment service providers (IPSPs) have a number of options to access payments systems, and there is a reasonable level of overall satisfaction with the quality of the indirect access offering that IPSPs receive.

However, the PSR outlined some concerns regarding issues that limit competition and innovation in the provision of payment services. Whilst IPSPs did have a wider choice of access options, the PSR noted that many small non-agency payment service providers have limited or no choice of indirect access to payment systems. The PSR also recognized a number of quality-related issues with indirect access for all categories of IPSPs, and a number of barriers to switching IAPs. The PSR attributed many of these concerns to certain industry responses to financial crime regulation, lack of entry of new IAPs and the increase in demand for real-time payments. The PSR commented on their progress and approach to addressing such concerns.

The PSR has an ongoing program of policy work that is aimed at creating more open and proportionate direct access to payment systems, making direct access a viable option for a greater number of participants and increasing the level of choice for payment service providers. The PSR is also monitoring a number of businesses planning to become IAPs, it will continue to monitor and support their progress as part of its approach to increase market entry and expansion of IAPs. The PSR plans to publish a report on its progress towards addressing the concerns outlined in its market review early in 2017.

The final report is available at: https://www.psr.org.uk/sites/default/files/media/PDF/MR1513-indirect-access-market-reviewfinal-report.pdf.