The UK’s Payments Industry 2030 Agenda: Challenges & Opportunities

The UK’s payment ecosystem has a solid reputation as one of the forefronts of innovation and best practices. Moving forward, this sector is expected to live up to its high standards and realize even more of its enormous potential.

Over the next decade, as technology advances and consumer expectations evolve, the UK is sure to encounter plenty of challenges and tackle lots of opportunities. This overview goes through the main focal points of the country’s 2030 payments industry agenda and the means by which they might be addressed.

3 Pillars of the UK’s Payment Strategy for This Decade

The following three categories are the key areas that require primary focus:

1. Delivering Consumer Benefits

It is essential for all consumers to have access to a secure and convenient payment environment. The key actions that need to be undertaken to enable it include:

• Providing more choices for the customers - It’s crucial for industry players to ensure that consumers have a variety of payment methods to choose from and understand their options. While cash must remain accessible, entities across the sector must ensure easy access to digital payments and promote their benefits and values.
• Ensuring advanced consumer protection - By 2030, the UK’s payment industry players are expected to be able to provide greater clarity and consistency in consumer protection with the help of regulatory collaboration and comprehensive market analysis.
• Promoting digital financial inclusion - Since digital financial services maximize the number of payment options while ensuring a high level of security, one of the industry’s goals is to make them accessible to all consumers without exception.

2. Encouraging Innovation

Another essential element contributing to fulfilling the UK’s 2030 payments industry agenda is the strive for innovation. Some of the main initiatives in this sphere entail:

• Improving the Digital Identity ecosystem - A consistent approach to bettering the Digital Identity ecosystem can help reduce payment friction, boost security, and support interoperability across the competitive market. In turn, all these benefits are forecast to make it easier for service providers to verify users and streamline transaction flows.
• Creating new solutions for fighting economic crime - Delivering increased prevention and detection of fraud while building trust across financial services is yet another critical factor on the agenda. To make sufficient progress by 2030, the payment industry must cooperate with the public sector to ensure that data sharing is exclusively secure and that funds linked to criminal activity are never missed.
• Focusing on liquidity optimization - It’s crucial to optimize current liquidity arrangements for domestic, cross-border, wholesale, and retail payment market infrastructures. This could be done by implementing more capable systems, auditing the flow of operations, and updating relevant regulations.

3. Supporting Fair Competition

The final action category on the 2030 agenda concerns payment market infrastructures. Their mission is to support a diverse and competitive ecosystem while being built on a business model that is economically sustainable in the long run. Fulfilling it is possible through:

• Aligning payment standards - Interoperability, innovation, scalability, and competition within the payment landscape are rooted in industry standards. While developing domestic payment standards is important, the UK should also aim to implement global standards wherever possible to avoid unnecessary friction and expenses.
• Maintaining an accessible payment infrastructure - In order to keep up with the rapidly evolving technologies and support a wide range of service providers, the payment infrastructure needs to remain flexible, resilient, and accessible. As the UK is adopting ISO 20022 and common API standards, the barriers to entry become lower, thus promoting competition.
• Issuing effective regulations - The UK´s payments industry has three main regulators (the Bank of England, the Financial Conduct Authority, and the Payment Systems Regulator) and several other entities that have the right to intervene. By 2030, these authorities are expected to coordinate with significantly improved transparency and efficacy for the sake of eliminating functional overlaps and delays.

Final Thoughts: Is the UK's Payments Industry Future-Ready?

While there are many aspects to tackle to fulfill the said strategy, the UK’s payments industry is in a position of strength, with some of the elements listed above already underway.

While the 2030 agenda is achievable, it will not be possible without collaboration between the government, regulatory authorities, financial institutions, PSPs, and businesses. All these parties must work together to achieve the set goals, address the challenges effectively, maximize the benefits, and create a reliable basis for future developments.