Hello, everybody. Welcome to C&F talks. And today we have with us John Mowat, who's Head of Strategic Policy at Pay.UK. John's going to be joining us at the Payments Regulation and Investment Summit on the 21st of January in London. Welcome, John.

Welcome. Thanks, Maurice.

Great to have you with us today.

Of course, The National Payments Vision has attracted a great deal of interest in the last few weeks or months, in fact. What is Pay.UK's response to it? And furthermore, do you believe that it will deliver the promised benefits in relation to innovation, competition and security?

Yeah, I think we can't say for sure at the moment, but I think we're pretty positive.

We think it can make a big difference. I think it lays a very good foundation. And then much of it, I think, in terms of the outcomes that we see, will depend on the actions that have been handed to the Payments Vision Delivery Committee.

So, this PVDC that has been set up, that will be led by Treasury and supported by the two regulators, the Bank of England and the Payment Systems Regulator. So, I think we're pretty positive about it, but I think a lot will depend on what comes out of that PVDC. It might be worth maybe touching briefly on some of the things that we particularly liked coming from the vision.

I think that there's probably three things I'd highlight, but the first would be it really gave support for us to move ahead with central infrastructure renewal and our technology strategy, which is, I think, the UK did lead the world back when faster payments was introduced back in 2008. And I think we have been somewhat stuck recently. So, the support that the NPV signals for our tech strategy, which we develop with customers, which is a more modular and phased approach to renewal, I think, allows us to sort of unblock and allowed us to go ahead and cancel the NPA procurement.

So, I think we were quite excited about that. I think that's a big movement that helps us. And then I think the other thing I'd highlight would be the support for a strong and effective payment systems operator.

We're obviously the retail payment systems operator and that, you know, the calls for sort of reform very much address the barriers to change on getting change moving more quickly in central infrastructure that we had and a number of our customers have also called for. So, I think there's a big opportunity there for us to move forward and unblock some of the issues that we talked about that at the moment around governance that sort of block innovation on our systems and block us or sort of keeping our systems as relevant as would be ideal.

And I think probably the final thing I'd highlight is, you know, the priorities in the NPV very much kind of match our own priorities. So, there's a big focus on resilience, big focus on infrastructure renewal, big focus on fraud and also a big focus on interbank payments in retail which we've obviously got an important role in enabling.

So, all in all, a very useful development the NPV, and I guess of huge benefits also for consumers with the safer and faster payments.

The landscape for payment seems to be becoming increasingly competitive which also I suppose helps consumers in driving costs of transactions down. How do you believe developments in Open Banking will promote competition and improve financial inclusion in particular?

Yeah, I mean I think we're already seeing this, so I mean a couple of examples, you know, 2021 was the first, HMRC was the first tax authority to offer Open Banking as a way of paying your tax return, I think you can now pay, I think it's over 40 sort of taxes and duties through Open Banking. I think, you know, you're seeing Open Banking being rolled out for pay, you know, for, you know, topping up ISAs, for paying off credit cards and a limited extent also in kind of retail purchase transactions.

I think we have already seen significant innovation. I think undoubtedly the really big opportunity is in retail purchase transactions and so we've seen a sort of collection of authorities and, you know, including the NPV come out calling for more choice in retail payments. I think we've had the Garner Review, the Payment Systems Regulators, this was a core part of its strategy. We've had the Bank of England in its discussion paper also calling for this and then finally the NPV so I think it's fair to say there is a consensus amongst the authorities that they want to see more interbank payments being used in retail.

But it does require collaboration across the system that we haven't quite got to yet and I think, you know, if we are going to be able to compete with the global card schemes, I think there's a number of pieces that are currently missing. I think the two I would call out would be, you know, the commercial model which is essentially what is the value exchange going to be between Open Banking and the banks as Open Banking gets rolled out into a much wider setting than was originally envisaged, and also, what is the level of consumer protection. I think obviously those two things are related because the commercial model needs to reflect the level of consumer protection.

I think those two things are the two big remaining blockers. Obviously NPV has given FCA sole responsibility for open banking so I think that is a welcome development that hopefully should speed up decision making in those two areas but there's also important things that we need to do like in the centre to enable interbank payments to be able to compete with cards once the commercial problem of consumer protection is, kind of, level.

So we've got a lot of work we're planning to do in 2025 looking at things like certainty of fate, so that's basically giving retailers the confirmation that the funds are there so that they can release the goods and that's a good example of the sort of thing we can do in the middle to enable account-to-account retail to happen.

Yeah, exciting times, aren't they? And it'll be interesting to see how the card companies respond as matters progress.

Can you tell us a little bit more perhaps about Pay.UK's work, specifically about how it will be delivering the new APP reimbursement regulations and supporting the industry in that way? And perhaps, just related to that, if I can just add in a supplementary question, perhaps a little bit more about your fraud prevention and detection work as well?

Yeah sure, I mean, we had some big fraud deliverables in 2024, in fact, that both fell in October 2024 so that was expanding out the confirmation of pays and name checking service to a much wider group of banks and then also delivering the, kind of, backing systems that enable APP fraud reimbursement to happen and so that was a big year of delivery for us in fraud, in coordination with the industry. So, we delivered both of those in October, and then there's a there's an upgrade to the APPR system that happened in December as well. So, I mean, that's they're both an example of, you know, the increasing complexity of the system and the more, I guess, the more parties that we're interacting with, so there's over 300 parties using our confirmation of payee tool now I think over 900 using the APPR or subject to the APPR reimbursement regulations.

I think, on the sort of detection side of things and we've been big advocates of trying to use our position in the centre to pull data because we did a great proof of concept testing where we pulled data from a number of banks last year and tested whether or not that was reducing the, you know, increasing the level of detection and reducing the amount of fraud and we saw really great results from that. I think 40% reductions in the level of fraud, so we really want to kind of push ahead and try to get in place the agreements for, you know, for that for the data sharing required to enable those tools to be able to use so we can really knock back the levels of fraud in the system.

Yeah, we look forward to discussing all of these areas, particularly the fraud and the work that various parties in the overall payment system are undertaking to reduce fraud at the event, which obviously just remind our viewers, it is on the 21st of January in central London. And if you would like further information, please do have a look at our website www.cityandfinancial.com where you'll find out all about the programme, the speakers and be able to register.

So, John thank you very much for joining us today, very much looking forward to seeing you on the 21st of January.

And you, thank you. Thanks for your time.