Out-Law News | 07 Aug 2014 | 4:13 pm | 2 min. read
A new Payment Systems Regulator responsible for overseeing competitiveness in the payment market is scheduled to begin its work in April 2015. It will have the power to designate individual payment systems as falling within the scope of its oversight.
It is not yet clear whether the Paym service will be subject to the new regulatory regime but a Payments Council spokesperson told Out-Law.com that as Paym constitutes a "mechanism for transferring money in the UK" it expects the service to fall subject to the Payment Systems Regulator's scrutiny.
"If a payment system is designated then anyone who has a part in its operation will be in scope of regulatory action," technology and payments law expert Angus McFadyen of Pinsent Masons, the law firm behind Out-Law.com, said. "One of the consequences of a payment system being designated is that the new regulator could set rules on access to that payment system, in some cases mandating access to new entrants that wish to participate.
"Paym sits in an unusual position as it is not a payment system in the conventional sense – instead, it is a piece of technology that allows a user to direct payments to be made using either of the existing faster payments or LINK payment systems, both of which will be designated," he said.
Earlier this week the Payments Council announced that more than one million people have now registered for the Paym service since it launched earlier this year. This comes at a time when the Office of National Statistics is reporting that only 53% of Britons use internet banking regularly.
Since 29 April, customers of Bank of Scotland, Barclays, Cumberland Building Society, Danske Bank, Halifax, HSBC, Lloyds Bank, Santander and TSB have been able to associate their mobile numbers with their bank account details through the Paym service so as to be able to send and receive payments using just a mobile number.
The Payments Council, which is backed by a number of banks and which is responsible for ensuring that payment services work in the UK, said £6.5 million in transactions have been processed through the Paym mobile payments service in the 100 days since it was introduced.
The Clydesdale Bank, first direct, NatWest, RBS, Yorkshire Bank and the Nationwide Building Society are among a number of other financial institutions that are expected to join the Paym scheme either later this year or in 2015.
Jemma Smith, director of communications and education at the Payments Council said: “It’s hugely encouraging that one million people have chosen to register for Paym already, but this milestone only marks the start of growth in the service. I think that securely paying back friends and family using just their mobile number will become second nature – and we’ll wonder why we ever did anything else. The next big step forward is more banks and building societies joining before the end of the year, and as a result we look forward to millions more people signing up and using the service.”