The Payment Systems Regulator (PSR) has launched a discussion paper about data in the payments industry.

It stated that as payments-related data use is growing and becoming increasingly important, the regulator is examining how this can affect the payments industry and consumers.

PSR managing director Hannah Nixon said: “Every time you make a payment or withdraw money, you generate data, that’s why we’re looking to understand what actions we might need to take in the future around the use of data in payment systems.

“We've identified three key areas we’re going to explore in more detail and are looking for everyone’s views,” she continued. “With this input, we’ll be able to take the right actions to shape the use of data in payment systems for the benefit of everyone.”

The way payments data is collected, used and shared presents opportunities and risks for payment service providers (PSPs) and the people and organisations that use payment systems, according to the PSR.

It could, for example, create new business models and improve access for new entrants into the sector, stimulating competition and innovation. It could also enhance the detection of financial crime and strengthen protections, although some of these opportunities might not happen through market forces alone.

On the other hand, the increased commercial use of data could influence how companies gain competitive advantage, which could have implications for end users in terms of the range or quality of services offered, noted the regulator.

As a result, the PSR is keen to understand the opportunities and risks of the changing treatment of data in the payments industry, and what role it could play to make sure new uses of data work for the people and businesses that use payment systems. This could be through removing barriers to setting up new services, or through mitigating risks associated with evolving uses of payments data.

The PSR is considering three key areas that could directly impact its objectives of promoting competition, innovation and the interests of service users in payment systems:

• Some people may have concerns about sharing the data attached to their payments with third-party companies providing other payments-related services. This could slow the development of innovative products and services, meaning people using payment systems may be less likely to see the benefits.
• Potential providers of new services may have limited access to data about transactions across a whole payment system, including data that may help develop new ways to fight fraud and other financial crimes within the system.
• There are potential barriers that could stop consumers and businesses getting the benefits from additional ‘enhanced’ data attached to transactions. This data could make processing payments cheaper and more efficient, leading to cheaper services.

The deadline for providing views is 3 September 2018.

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