An efficient payment infrastructure should be efficient and reliable while minimises costs to businesses and consumers.
and not fragmented by a thousand different suppliers.
A UK government regulator is calling for greater competition in banking payment infrastructure provision. The Payments Systems Regulator’s (PSR) market review into the ownership and competitiveness of infrastructure that supports the three major UK payment systems – Bacs, Faster Payments Service (FPS), and LINK – concluded …
Increasing competition will most certainly protect consumers from cartelization; that's the rationale, I think.
There's really no way that this can be the rationale. Competition isn't fostered by more regulations. The standardization/interoperability definitions are a good start, but it's the barriers-to-entry that's preventing competition. Generally, more regulation protects the incumbents, not consumers and certainly not new market entrants. #flameaway
"The regulator is also recommending divestment by the four largest payment service providers of their interest in VocaLink"
The 'schemes', as they're know in the industry (not payment service providers which are entirely different organisations) do not own VocaLink. VocaLink is owned by the banks and probably 93% Mastercard soon.
It's better to focus on what PSD2 brings and the innovation for consumers than replacing core infrastructure which works reliably.
In the UK about 97% of debit payments are made through the Visa network so for ‘instant’ payments it’s really a monopoly.
This acquisition provides MasterCard with access to real-time payments (FPS) and peer to peer mobile instant payments in Zapp (plus Bacs & Link).
The PSR complain that the banks own the company that runs the infrastructure so it has to be sold off. Who’s going to buy it? Can’t be another bank as there would be complaints of unfair advantage for that bank over the other users of the system. Could be FDI, but that also implies monopoly.
This is what happens when a regulator wants the government to think they are relevant.
Also, at a global level, UnionPay is larger than Visa and MasterCard.
I found out last year when trying to buy a car that FPS only works on transactions less than the value of the ( £4k ) car I was trying to buy. I had to split it into two ( and apparently the girl on the phone at my bank could have been told off for agreeing that I could do that ).
It makes no sense - do banks make that much out of CHAPS payments that it's worth hobbling FPS?
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