Payment services firms: Navigating operational and regulatory challenges in an age of uncertainty

PwC recently published a White Paper on Payment services firms - navigating operational and regulatory challenges amidst an age of uncertainty exploring how the payment services landscape has evolved significantly over the last few years.

The Financial Conduct Authority (FCA)'s July 2020 Dear CEO letter highlighted that financial crime and prudential risk are key areas of focus. The same can be said about its short consultation proposing additional temporary guidance to strengthen payment firms? prudential risk management. The regulator's guidance covering capital stress testing, liquidity, risk management and wind down plans is more akin to what we would normally see for banks.

As a result, the FCA now requires e-money and payment services firms to have wind-down plans in place. The recent collapse of a number of high-profile firms has  highlighted the extent of the adverse impact on consumers, clients and other market participants when a firm winds down regulated business without sufficient control or adequate planning. 

An effective wind-down plan ensures firms can cease regulated activities and implement cancelling permissions in an orderly way, with minimal impact on clients, counterparties or wider markets. It is important that the planning considers various scenarios including market-wide stress, and the resources required to execute an orderly wind-down.

A fundamental part of the wind-down plan is the need to calibrate the appropriate trigger point. This may range from the point where business becomes non-viable, to when severe risk events crystallise. Assessments should also consider analysis on the ability for counterparties to find alternative providers and required actions to treat customers fairly during the wind down period. This needs to be consistent with the regulator's expectations.  

PwC's advice is that payment service providers (PSPs) should enhance governance and risk management controls to consider how liquidity requirements are being and will be met. Likewise, firms should be better equipped to forecast and monitor cash flows to mitigate potential shortfalls and avoid the inability to complete client transactions.

PwC is holding an event for PSPs and those interested in the topic to discuss the implications for their organisations. The session will take place on 11 December 2020 at 9am. If you would like to join the event, please click to register. If you would like to discuss the white paper further please contact or

Area of expertise: