Our access work

Access to payment systems is important because it helps to increase competition and innovation, which can bring benefits to everybody through lower prices and new products and services to meet different needs.

The PSR has historically published an annual report on developments in access and governance of interbank payment systems, including the progress of our work and the related outcomes.

From 2023 we will publish the information on this web page, rather than as a downloadable report.

The format of the information displayed will be different to the reports we have previously published, but will contain all the necessary tables and charts representing the factual information on access. The change in approach is to make the information more accessible to all stakeholders.

The information will be sorted and available by the following categories:

  • Total number of participants in the interbank payment systems
  • History and projection of new participants in the interbank payment systems
  • Number of indirect payment service providers (PSPs) by indirect access provider (IAP)
  • Number of PSPs (credit institution or non-credit institution) for each IAP
  • Volume of payments for each IAP by interbank payment system
  • Value of payments for each IAP by interbank payment system

Summary

The number of new direct participants¹ in interbank payment systems² continued to grow, with seven new participants in 2021. The projections for 2022 and 2023 demonstrate continued interest from PSPs in gaining direct access to interbank payment systems.

The number of indirect access providers has doubled from four to eight since the PSR was created in 2015. While we saw new IAPs³ join the interbank payment systems in 2019, there were no new IAPs in 2020 or 2021.

1. Direct participant: An organisation is considered to have direct access to a payment system if it is able to provide payment services as a result of having an arrangement with the payment system operator – i.e. becoming a direct participant.

2. Interbank payment systems: The UK’s interbank payment systems include Faster Payments, CHAPS, BACS and the Image Clearing System to pay and clear cheques.

3. IAPs provide access to the payment systems to indirect PSPs.

Direct access to payment systems 

PSPs with direct access to a payment system are called direct participants. They settle payments through their own settlement account at the Bank of England, and process payments through a technical connection to the payment system’s central infrastructure.

Source: Compliance reports submitted to us by Pay.UK under our General Direction 2, and the Bank of England’s annual summaries of payment statistics from 2016 to 2021. Note: 2015 data is based on our 2015 Access and governance report

This table shows growth in the number of direct participants over 2015 to 2021. All interbank payment systems have seen a steady growth in direct and indirect participants, with the exception of Cheque and Credit. Faster Payments has seen its participants grow from 10 in 2015 to over 35 in 2021. Projection suggests over 40 FPS participants from 2022.

0 3 6 9 12 15 18

Source: Pay.UK (operator of Bacs, Faster Payments and the Image Clearing System (ICS)) and the Bank of England (operator of CHAPS). Note: 2022 and 2023 data is the projected number of joiners, so is subject to change.

Seven new direct participants joined one or more of the interbank payment systems in 2021.

  • Bacs: LHV
  • CHAPS: Goldman Sachs
  • Faster Payments: Mettle, Prepaid Financial Services, Tesco, Cashplus Bank, JP Morgan

Indirect access to payment systems

An IAP is a direct participant in the interbank payment systems that can provide access to other PSPs (‘indirect PSPs’). This gives the indirect PSPs the ability to send and receive payments through the direct participant. There are two main forms of indirect access, agency and non-agency:

  • Agency access means an indirect PSP has its own sort code provided by its IAP.
  • Non-agency access means an indirect PSP uses a sort code shared with other indirect PSPs.

Historically, established IAPs have limited risk appetites for providing services to non-bank PSPs, with smaller payment institutions affected most (especially money service businesses (MSBs)). Some IAPs are not currently onboarding any PSPs that they perceive as high-risk (including MSBs). Established IAPs still supply around 90% of indirect PSPs, but newer players have continued to gain share since they started providing indirect access services in 2017.

There are currently eight IAPs to the interbank payment systems:

Established: Barclays, HSBC, Lloyds, NatWest

New IAPs before 2021: ClearBank, Starling, LHV Pank, Modulr

There were no new entrants as IAPs in 2021.

Source: PSR annual indirect access information requests.

  • Two of the established IAPs had fewer indirect access customers in 2021 than in 2020.
  • One IAP has been the largest provider of indirect access services (by number of PSP customers) since 2015, and by 2021 it had 36 new PSP customers.
  • Between 2018 and 2021, new-entrant IAPs have taken on a growing number of customers. These included smaller PSPs and small money remitters, which historically have had the most difficulty gaining access. Between 2020 and 2021, the number of PSPs served by new entrants grew by 30%.
  • In 2021, the new-entrant IAPs continued to take on many customers, including smaller PSPs and small money remitters. ClearBank and Starling increased their PSP customer base in 2021: it was up by 38 PSP customers between them compared with 2020. ClearBank and Starling’s combined share continues to be higher than one established IAP. Modulr and LHV Pank have both seen growth in the number of PSPs, from zero to a combined total of 60.

Source: PSR annual indirect access data requests

Note: New entrants are ClearBank and Starling in 2017, and LHV and Modulr in 2019.

The table shows that the majority of PSPs that are supplied by new entrants are non-credit institutions (i.e. not banks or building societies). The number of these has grown significantly between 2020 and 2021.

The number of credit institution PSPs across all IAPs seems to be consistent across both years.

0 100000000 200000000 300000000 400000000 500000000 600000000 700000000 800000000 0 3000000 6000000 9000000 12000000 15000000 0 3000000 6000000 9000000 12000000 15000000 0 50000000 100000000 150000000 200000000 250000000 300000000 0 200000000 400000000 600000000 800000000 1000000000 0 1000000 2000000 3000000 4000000 5000000 6000000 7000000 8000000 0 3000000 6000000 9000000 12000000 15000000 0 100000000 200000000 300000000 400000000 500000000

Source: PSR annual indirect access information requests.

Note: New entrants are ClearBank and Starling in 2017, and LHV and Modulr in 2019.

The table shows the proportion of total volume of payments for each IAP by interbank payment system in 2020 and 2021.

By volume of all payments originating from IAPs, one IAP accounted for most of the payments in Bacs and ICS in 2020 and 2021. In CHAPS and Faster Payments, one to two IAPs accounted for most of the payments originating from indirect PSPs.

New-entrants IAPs’ share of total volume has grown significantly over Faster Payments and CHAPS between 2020 and 2021. The share in BACS across all IAPs seems to have remained relatively consistent.

0 10000000 20000000 30000000 40000000 50000000 60000000 70000000 80000000 0 500000 1000000 1500000 2000000 2500000 0 500000000 1000000000 1500000000 2000000000 2500000000 0 10000000 20000000 30000000 40000000 50000000 0 10000000 20000000 30000000 40000000 50000000 60000000 70000000 80000000 0 500000 1000000 1500000 2000000 0 500000000 1000000000 1500000000 2000000000 0 10000000 20000000 30000000 40000000 50000000 60000000 70000000 80000000

Source: PSR annual indirect access data requests.

Note: New entrants are ClearBank and Starling in 2017, and LHV and Modulr in 2019.

The table shows the proportion of value of payments for each IAP by interbank payment system.

By value, most interbank payment systems had two to three IAPs accounting for most of the payments originating from indirect PSPs – except for CHAPS, where a single IAP made most of the payments in both 2020 and 2021.

New entrants had the greatest increase in value for Faster Payments between 2020 and 2021, with a marginal increase in Bacs value.

Withdrawals and refusals of access to payment account services

Under Regulation 105(3) of the Payment Services Regulations 2017 (PSRs 2017), if a credit institution refuses a request from a PSP that is not a credit institution for access to payment account services, or withdraws such access, it must notify the FCA. Each notification is automatically forwarded to the PSR. We, with the FCA, review all notifications that we receive for potential issues and/or emerging themes.

The number of withdrawals and refusals have changed as follows in recent years:

  • We received 43 notifications from credit institutions concerning withdrawal of access to payment account services in 2021, compared with 44 in 2018.
  • Of the 43 withdrawal notifications we received in 2021, around 75% originated from one IAP.
  • We received 143 notifications concerning refusals to grant access to payment account services to a PSP in 2021, compared with 189 in 2018 and 261 in 2020.

Complaints received

We are the relevant authority for monitoring and enforcing compliance with regulation 104 of the PSRs 2017 and, alongside the FCA, for regulation 105. This includes:

  • complaints from PSPs about access refusals or withdrawals
  • notifications from credit institutions that refuse or withdraw access to payment account services

We received one complaint in 2021 concerning potential non-compliance with the requirements of regulation 105.