What is a payment system?
Put simply, a payment system is the mechanism to move money between individuals, business and government.
In the UK we currently have a combination of electronic payment systems, plus a paper-based system which is used to process cheques and other paper credits.
Under section 41 of the Financial Services (Banking Reform) Act 2013, a payment system is defined as “a system operated by one or more persons in the course of business for the purpose of enabling persons to make transfers of funds”.
Payment systems are a critical component of the UK economy and to ensure their security, reliability and efficiency, payment system operators, commonly known as payment schemes, oversee and manage the day-to-day activities of payment systems and set rules for different types of payments.
The payment schemes also oversee the activities of the infrastructure providers, such as VocaLink, who are contracted to manage and operate the technical infrastructure that processes the different types of payments.