The way businesses and consumers pay their bills is scheduled for the largest shake-up in decades under plans proposed by regulators.
Three of the main retail payment systems – Bacs, Cheques and Credit Clearing Company and Faster Payments Service – are to be binned and replaced with what authorities hope is a clearer and more secure, consolidated system.
Watchdog the Payment Systems Regulator (PSR) has been working with a crack-team of traditional banks, disruptive competitors and fintech companies to develop the new structure.
The PSR said the changes would mark a seismic shift in the way Britons pay for goods and services. Managing director Hannah Nixon labelled the changes a “once in a generation” opportunity and added:
When people look back at the evolution of payment systems in the UK… [they’ll say] that’s when things changed.
In response to growing volumes of payees being duped into transferring money to fraudsters, a new “confirmation of payee” systems is planned – where the payer gets confirmation of the authenticity of the payee prior to transferring funds.
Sarah Pennells of money website Savvywomen said the changes were a step in the right direction.
"In recent years, we’ve seen fraudsters exploit the lack of protection that consumers have if they unwittingly transfer money into a fraudulent account.... Many people assume it is easy to get their money back if they make a mistake with the payee, but it’s not always been straightforward," she said.
Also planned is a “request to pay” function, allowing customers to authorise regular transactions such as phone bills or gym membership, ensuring the customer had sufficient funds in their account before a company can withdraw money.
The PSR is an organisation operating under the umbrella of the UK’s wider financial regulator, the Financial Conduct Authority. It has been functioning since July 2015 and is charged with the responsbility of regulating payment systems in the UK.