UK’s Future of Payments Review endorses Open Banking as way to boost competition

Ellie Duncan
22 Nov 2023

A review of the UK’s payments industry has identified the need for consumer protection or a dispute resolution mechanism for payments via Open Banking, and also recommended Open Banking “as the route to improve the UK consumer account-to-account payment journey”.

It has also suggested that Open Banking could provide “a viable digital alternative to the card schemes”, following “notable dissatisfaction” with the cost of card schemes among retailers and merchants and alongside the growth of digital wallets.

The independent ‘Future of Payments Review’ was commissioned by Chancellor Jeremy Hunt in July this year “to help deliver the next generation of world class retail payments” and was led by former Nationwide chief executive officer Joe Garner.

Regarding consumer protection, the review called on HM Treasury, JROC and industry participants to “prioritise addressing the need for a basic level of consumer protection and clarity on liability for payments made via Open Banking”.

The increased popularity of Authorised Push Payments have “exposed a gap in consumer protection” for both purchase protection and protection from scams, and therefore requires “urgent attention”.

Garner suggested that this could take the form of a basic dispute resolution service that deals with purchase protection, “potentially shared at the industry level (a bit like an industry ‘chargeback lite’ service)”.

He also noted that, in Brazil, the Open Finance Structure of Governance formed by several industry associations is “entitled to manage all dispute resolutions between Open Finance participants” and that the central bank has recently imposed liability onto third-party payment providers.

Elsewhere, the review recommended focusing on Open Banking “as the route to improve the UK consumer account-to-account payment journey” on the basis that the UK is “falling behind” in terms of person-to-person payments made by bank transfer.

In the review, Garner referred to the UK as holding “a leading position on Open Banking”, with an “encouraging” 200 third-party providers registered and approved, and that “recent Open Banking journeys in the UK are beginning to rival some of the best in class around the world”.

However, while customer advocacy with the UK account-to-account process is currently 77%, in line with the global average, this means it lags Brazil’s 92%.

Garner added that “if the UK does not improve the user experience, the UK experience will soon look outdated”.

The review also suggested that the UK considers a digital identity scheme given that, in countries where there is a national identifier or digital ID, “progress has often been made more rapidly in the payments space”, citing India, Scandinavia and the Netherlands as examples.

Industry reaction

Jana Mackintosh, managing director of payments, innovation and resilience at UK Finance, said: “The UK payments market is strong and well-developed, and we are pleased to see this reflected in the Future of Payments Review.

Jana Mackintosh

Jana Mackintosh of UK Finance

“However, we agree that the pipeline for change is congested, and the payments landscape needs to be simplified. We strongly support better coordination between regulators to help smooth the road.”

Charles Damen, chief product officer at, said: “By endorsing the wider use of Open Banking to boost competition and innovation, and calling for a focus on Open Banking as the primary solution for providing a viable digital alternative to card schemes, the recommendations set forth today in the UK’s Future of Payments Review will help the country capture a world leading position in retail payments.”

However, he added that this potential could only be realised via “a scheme-like approach built upon mutually beneficial commercial models for UK banks and fintechs” to support premium Open Banking services.

The Payment Systems Regulator (PSR) has welcomed the review’s publication.

In a statement, the PSR said: “The review offers support for the key elements of the PSR’s Strategy: boosting competition through Open Banking and account-to-account payments. The PSR continues our work to maximise those benefits, keeping the UK as a world leader in payments.

“Our work continues on important matters such as tackling APP fraud and realising the benefits of variable recurring payments through Open Banking. We look forward to working with HMT to deliver a vision of payments for the future.”