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In a  to Prime Minister Keir Starmer, the Payment Systems Regulator (PSR) has set out its deliverables for growth, including action on card fees and infrastructure. 

The PSR pledged to support the UK government’s economic growth agenda, as requested by both Starmer and his chancellor Rachel Reeves, with a five-point plan aimed at enhancing competition, innovation and infrastructure in the UK’s payments sector.

“We strongly welcome the government’s growth mission and are ready to play our full part in this shared endeavour,” the letter reads.

PSR managing director David Geale emphasised the regulator’s role in fostering sustainable growth and ensuring the UK remains a global leader in this field. 

“With over £100 trillion flowing through the UK payments infrastructure annually, payments are an essential part of our economic lives and critical to business and the wider economy,” he said. 

Geale praised the fintech sector as “an investment magnet and major growth opportunity, with a 10% global market share and significant forecast revenue growth”. 

The PSR’s plan

The letter notes the introduction of a new senior leadership role, merging the PSR managing director position with the Financial Conduct Authority (FCA) executive leader for payments and digital assets.

This step is intended to support efficiency and coordination and this new role will be central to implementing the PSR’s plan. 

A key strand of the regulator’s plan is its commitment to take action on card fees. 

It plans to cap cross-border interchange fees, which have increased fivefold since Brexit and are a key cause of rising costs for merchants, particularly small businesses.

It also intends to review domestic scheme and processing fees. 

According to the letter, addressing these costs will help businesses remain competitive and support broader economic growth.

Geale noted that this consolidation is intended to streamline decision-making, enhance regulatory clarity and reduce duplication, ensuring a more coordinated approach to oversight.

Encouraging innovation also remains a priority, with the launch of a dedicated innovation unit designed to identify and remove barriers to growth, support new business models and explore emerging trends such as the use of artificial intelligence (AI) in payments. 

“We will measure our success through the impact we are having in supporting innovation, engaging with the payments innovation community to assess this,” Geale said. 

To future-proof the UK’s financial system, the PSR said it is collaborating with the Bank of England to modernise the Faster Payments system, ensuring it remains efficient and resilient. 

Alongside this, the regulator said it will assess long-term infrastructure needs to support continued innovation and investment in the payments sector. 

According to Geale, the PSR “will set out the approach by end of Q2 of this year”. 

And, like the FCA, the PSR has thrown its support behind open banking, which the letter states is now valued at £4.1bn and benefits more than 11m users. 

Geale echoed the FCA’s letter to the Prime Minister in stating that the PSR is committed to expanding open banking’s potential. 

“Working with the FCA, as the regulator for open banking, and with industry, we will advance work to introduce a new open banking payment method for particular payments, paving the way for more competition and choice,” the letter says. “We will support the FCA as it broadens the use of open banking for e-commerce.”

Beyond its growth-focused initiatives, the PSR remains committed to safeguarding consumers, and has said that the regulator will continue enforcing strict reimbursement requirements for victims of authorised push payment (APP) fraud and commission an independent review of its impact.

This, according to Geale, will include impact on investment.

Geale acknowledged the complexities of regulatory change, but expressed confidence that the PSR’s measures, in alignment with the government’s National Payments Vision, will provide a strong foundation for sustainable economic growth.

“These steps will support the Government’s growth mission, and we are accountable for delivering them,” said Geale. 

“I look forward to discussing them with your team, to deliver opportunities for payment systems which meet the needs of people and business, and provide strong support to economic growth.”