The UK financial services regulators are closely monitoring the COVID-19 situation to seek to protect the UK's payment services and systems sector and manage the challenges the coronavirus pandemic could pose to business and customers. In particular, the Payment Systems Regulator (PSR) is closely monitoring the situation and the impact the coronavirus may have on the UK’s payment systems. The PSR stated that it expects firms to take reasonable steps to manage the evolving risks and any development that occurs in relation to coronavirus, and to report to them any issues that may arise. Its key priority is ensuring the UK's payment systems continue to work well markets continue to function efficiently, and accordingly, it has amended its rules and regulations.
This webpage sets out the key updates to date and points firms should be aware of. Please see our separate webpages on the response by the Bank of England and the Prudential Regulation Authority, how the Financial Conduct Authority has responded and the measures taken by the European financial regulators in response to COVID-19.
- Confirmation of Payee (CoP) – on 20 March 2020, the PSR published an update on the implementation of CoP, which aims to reduce fraud and misdirected payments in electronic bank transfers. In light of the significant pressure currently facing the directed banks, the PSR has permitted a delay in the roll out of CoP until 30 June 2020. Nevertheless, the PSR expects banks to provide appropriate protection to people and take steps to ensure customers are not disadvantaged from the delay, including refunding victims of fraud if CoP would have prevented it from happening.
- Contactless payments limit increased - UK Finance announced the spending limit for contactless card payments will increase to £45 from 1 April 2020. The changes were in consideration before COVID-19 but following several other European countries increasing their limits, the process was expedited.
- PSR Annual Plan and Budget 2020/21 - on 31 March 2020 the PSR published its Annual Plan and Budget for the year 2020/21. While the Annual Plan and Budget was drafted before the emergence of COVID-19, the PSR has stated that payment systems are essential and the work will continue albeit on a revised timeline.
- PSR Quarterly Update (Summer 2020) – on 31 July 2020 the PSR published its first quarterly update, which covered: CoP, access to cash, and the PSR's strategy for the future. The PSR noted the seismic shift caused by COVID-19 and the positive reaction from the payments industry.
- Access to cash – on 24 March 2020, the Financial Conduct Authority (FCA) announced it is with working with the Bank of England (BoE) and the PSR to ensure access to cash and stability with electronic payment providers given the potential changes in transaction numbers. They have also voiced their concerns about firms reminding consumers to be aware of fraud and protecting personal data. Similarly, the FCA has stated that banks and building societies are considered as providing essential functions and should remain open where possible. The PSR released a webpage on 8 April 2020 providing an update on its work supporting access to cash during this crisis. The PSR's priority is ensuring access to cash for consumers which ensuring safety of firms' workforces and it is working with the other members of the Joint Authorities Cash Strategy group in this regard. The webpage contains a series of FAQ's in relation to cash and payments, which the PSR will update periodically. On 16 June 2020, the PSR and the FCA published a joint statement setting our their approach to access to cash. The PSR and the FCA have aimed to deliver a better understanding of cash access to support coordinated action. The regulators have communicated with people and business, while focusing on the needs of the vulnerable. Further on 30 June 2020, the PSR and FCA also published an update on their joint work to map access to cash and published a webpage providing information on the coverage of access to cash.
- Annual perceptions survey – the PSR is reviewing its timeline to reach out to stakeholders to take part in the annual perceptions survey and it will follow with more details in due course.
- Strong Customer Authentication (SCA) - the FCA released an updated statement on 30 April 2020 on SCA and the impact of COVID-19. It stated that firms are expected to protect customers and monitor their fraud rates to take swift action if they notice their rates rising. In light of the increased pressures faced by firms, the FCA will give the industry an additional 6 months to implement SCA for e-commerce (until 14 September 2021 from the initial 14 March 2021). In this regard, the FCA requires e-commerce firms to continue to manage their fraud risk and take all necessary steps to comply with the revised timeline, and expects UK Finance to develop a detailed phased implementation plan as soon as possible. The FCA will also consider, on a case-by-case basis, the next steps for firms that have not met their SCA requirements for online banking which have applied since 14 September 2019 (with an adjustment period until 14 March 2020). The adjustment period included time for third-party providers (TPPs) to migrate their customers to new or modified interfaces and the ability for account servicing payment service providers to provide TPPs with access to certain data. Firms processing contactless transactions should have made every effort to comply with SCA by 14 March 2020. However, the FCA is very unlikely to take enforcement action if a firm fails to apply SCA to cumulative payments exceeding €150 or five consecutive contactless transactions, but only if the firm has the necessary fraud monitoring tools and systems in place, and mitigates the risks. Further, in light of the recent concerns within the charity sector of disruption to contactless donations as a result of the new SCA requirements, the FCA stated that due to the social benefit and low risk of fraud, they encourage firms to work with the charity sector as they currently do now.
Payment Systems Regulator - COVID-19 - updates from the PSR
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