The UK's newly formed Payment Systems Regulator (PSR) is looking to nudge the industry towards innovation, but if that does not work it is willing to try stronger measures, its executives have said.

Gareth Thomas, acting head of regulatory strategy and policy at the PSR, talked tough at an industry event last week, saying: "Strategy setting has to be focused on end users, not just serving the interests of the larger banks."

Thomas said he "has sympathy" for banks that argue regulators should not