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A senior official at the UK's Payment Systems Regulator (PSR) has disclosed that the organisation is keeping a close eye on bigtech’s growing role in payments, joining other regulators across the continent.
The PSR is “watching carefully” how technology companies outside payments might move into the space, according to Natalie Timan, the regulator’s strategy chief.
Timan specifically called out the likes of Twitter and TikTok while speaking at the PSR’s Annual Plan launch event.
“There are other organisations who have already moved into the payments space, whose influence could grow significantly,” she added, noting Apple, Google and Amazon.
The PSR’s sentiment here echoes that of other regulators in Europe, where concerns are brewing over the role of bigtech in payments.
For example, last month, the deputy governor of the Bank of Italy said that “the role of technological providers including bigtechs in the payments sector still needs to be clarified”.
The Dutch central bank also distributed a bulletin in April suggesting that bigtech’s increased role in financial services requires “special attention”.
Change in payments has been exponential, Timan acknowledged. “For some of us, phones are replacing our purses and wallets.”
Timan added that technology supporting payments is also developing at an extraordinary pace as a result of application programming interfaces (APIs) and distributed ledger technology.
“Of course, a day doesn’t go by when things like AI aren’t in the news and it will be interesting to see the impact they actually have on payments,” she said.
Mike Chambers from advisory firm Northey Point was also speaking on the panel and agreed that consumers now have their “bank in their pocket”.
Meanwhile, he also noted the role of bigtech in payments from a fraud perspective.
“We need to be gunning for a nation of confident users of digital payments in an environment and ecosystem where the fraudster doesn’t prosper, and tech helps not hinders,” he said. “If we all work with that type of mandate, we will make the payments world a better place.”
Chambers continued that often news stories he has seen regarding fraud highlight how the transaction stemmed from an email or text message.
“If you look in those stories, it just seems to me that we’ve got to do something about the communication layers of a payment as well as the payment itself. We need to think of the payment as a whole,” he said.
Here, he further added that his “plea” to the PSR was to upgrade Pay By Link, a technology that allows customers to make payments by sending them a web payment link while they are on the phone, chat or social media, to Request To Pay.
Concerns over how fraud comes about reflect last week’s release of the government’s fraud strategy.
This committed to making the tech sector put in place extra protections for customers, as well as introducing tough penalties for those who do not.
Meanwhile, the government has also said that it will “shine a light” on which platforms are the safest, making sure that companies are properly incentivised to combat fraud.
This echoes plans of the PSR to name and shame banks over authorised push payment (APP) fraud handling.
Chambers, who is the former CEO of the Bacs payment scheme in the UK, also spoke of the benefits that open banking has delivered for UK citizens.
“There have been some great things done with HMRC. The three or four most awful, friction-filled payments that I make to HMRC every year have been transformed by open banking with confidence, trust, and certainty.”
“Yet, as we look forward, as good as those payments are to HMRC in the open banking environment, they are not the TFL contactless moment,” he said, referring to London’s transportation ticketing system which pioneered contactless payments in the UK.
“There is so much more to come in the payments space.”
Variable recurring payments (VRP) are also on the cusp of becoming more widespread, he said.
“We’ve seen a toe in the water with VRP,” he noted. “Yet, despite that, I still get a text from my bank saying that I am £41.17 overdrawn and could I please fund my account, when they know I’ve got another account that I can send my money across to.”
The PSR’s Annual Plan, which the event centred on, was released at the end of March. It includes priorities such as tackling APP fraud, encouraging the uptake of account-to-account payments and monitoring market developments in the crypto space.
