The Payment Systems Regulator (PSR) has published a consultation setting out ways to reduce risks to the successful renewal of the UK’s interbank payment systems.

Whether receiving wages or benefits via Bacs, using a smart phone to send money to a friend via Faster Payments or paying bills through Direct Debit, interbank payments are essential to the smooth running of our day-to-day lives and the functioning of the UK’s economy.

The UK’s New Payments Architecture (NPA)

The NPA is the payment industry’s proposed way of organising the clearing and settlement of most interbank payments (payments that are made from one bank account to another) in the future, including those that currently use Bacs and Faster Payments. Pay.UK, the operator of Bacs and Faster Payments, is responsible for managing the delivery of the NPA.

The NPA represents a significant opportunity to meet growing demand for digital payments, further improve resilience and support increased competition, to benefit people and businesses across the UK.

To make sure these improvements are delivered, the PSR wants to lower risks to the delivery of the NPA as well as make sure it operates in a way that benefits everyone who uses it.

Reducing risks to support a successful outcome

There are unacceptably high risks that the current NPA programme will not provide value for money and could stifle competition which could, in turn, delay the development of products and services that benefit people and businesses.

To lower the risks to the delivery of the NPA, the regulator is seeking views on limiting the initial central infrastructure contract to only those services that are most important to its successful launch.

The PSR is also consulting on the best way to support competition and innovation when the NPA is operational, including the role of the PSR’s regulation of the NPA and the firm providing the systems and infrastructure.

Proposals include that Pay.UK acts as a single point of contact for payment firms, so that commercially sensitive information does not pass to the central infrastructure provider. The PSR is also proposing that the central infrastructure provider is operationally separate from parts of any wider business which could benefit from unfair competitive advantage in payment markets.

The PSR is inviting views to inform its next steps, later in the year.

Chris Hemsley, Managing Director of the PSR, said:

‘We all rely on the ability to make and receive payments using our bank accounts – it supports our daily lives, businesses and the economy.

'It is critical that Pay.UK’s work to update this key part of our payments infrastructure delivers effectively, including by supporting new, innovative ways to pay and greater competition in payments.

'We have set out proposals today that would change how Pay.UK achieves this upgrade, by simplifying what is delivered, focusing on the investment that will have the most impact.

'We have also set out how our regulation will protect people and businesses, including by ensuring that there is fair competition in the provision of new payment services delivered using the new infrastructure.’