The UK government announced on Tuesday that it will abolish the Payment Systems Regulator (PSR) and transfer its responsibilities to another financial regulator as part of efforts to slash red tape and encourage economic growth.
The PSR, which oversees payment systems such as MasterCard (MA.N) and bank transfers, is responsible for addressing issues like fraud, high fees, and limited competition among banks and payment providers.
According to the government, the decision to dissolve the PSR follows concerns from businesses that the UK’s financial regulatory framework—currently divided among the Financial Conduct Authority (FCA), the Bank of England’s Prudential Regulation Authority, and the PSR—is overly complex.
Reactions from payments and fintech business leaders
Alan Stephenson-Brown, CEO of Evolve:
“Payments don’t exist in a vacuum; they rely on the underlying network infrastructure that keeps transactions secure, seamless, and compliant. The PSR played a crucial role in ensuring that payment networks evolved in a way that prioritised resilience, competition, and innovation. With its abolition, we need to be certain that the FCA will maintain that same level of oversight, especially as real-time payments and Open Banking adoption increase demand on network infrastructure.
“Streamlining regulation is a good move if it reduces unnecessary complexity, but if this shift deprioritises payments-specific challenges, businesses could face unintended consequences. The process of merging regulatory bodies can create temporary uncertainty and operational challenges, potentially disrupting the fintech ecosystem during the transition period. The UK has built a reputation as a leader in fintech and payments innovation – this change needs to reinforce that leadership, not hinder it.”
Zaki Farooq, Chief Technology Officer and Co-Founder of PayFuture:
“The abolition of the PSR and the shift to the FCA represents a major regulatory shake-up for the UK payments sector. Regulatory consistency is essential to fostering innovation and cross-border growth. On the positive side, streamlining oversight could reduce operational friction and make compliance more predictable, which is particularly beneficial for fintech firms working across multiple jurisdictions. However, the PSR was a strong advocate for payments innovation and competition.
“The UK has long positioned itself as a fintech powerhouse. To retain this status, the transition must not come at the cost of progress in financial inclusion, next-gen payment technologies, and cross-border payment accessibility.”
Kamran Hedjri, CEO, PXP Financial:
“For merchants and payment service providers, regulatory clarity is always welcome as too many overlapping rules can create unnecessary costs and slow down innovation. Moving the PSR’s responsibilities to the FCA could, in theory, make compliance more straightforward. The PSR was a strong advocate for improving payments competition, reducing card fees, and advancing Open Banking adoption.
“If the FCA does not give payments the same level of attention, we risk stalling progress in these critical areas. Merchants need fair access to diverse and cost-effective payment options, and fintech innovation depends on a regulator that actively pushes for market improvements. The UK has led the way in fintech growth and this change will be positive if the FCA champions payments innovation with the same energy as the PSR.”
Derrick Lynagh, Head of Strategic Sales & Partnerships at MuchBetter:
“The UK has built a reputation as a global leader in fintech innovation, and regulatory clarity is crucial for companies like MuchBetter that are pushing the boundaries of payments technology. The consolidation of the PSR into the FCA could bring welcome efficiency, reducing compliance friction for firms navigating multiple regulators.
“If the FCA does not prioritise payments innovation with the same focus, there’s a risk that fintech firms, particularly those pioneering next-gen payment methods like wearables and biometric authentication, could face slower adoption and regulatory uncertainty. For this to be a positive step, we need the FCA to actively champion emerging payment technologies and ensure the UK remains a prime environment for innovation.”
Ryta Zasiekina, Founder of payments company CONCRYT:
“The PSR played a critical role in ensuring fairness and security in the payment’s ecosystem, particularly in tackling fraud, enforcing strong payment authentication standards, and promoting competition. While consolidating oversight under the FCA might reduce complexity for businesses, there is a real risk that payment security and fraud prevention may receive less dedicated focus.
“With the rise of APP fraud, money laundering threats, and evolving cyber risks, payment security cannot become an afterthought in the push for economic growth. The PSR had a strong track record in holding firms accountable for fraud prevention, especially in pushing for liability frameworks that protected consumers and businesses. The fintech sector needs assurance that the security and innovation will continue going hand in hand.”
