We have decided that Pay.UK should phase the development of the UK’s New Payments Architecture (NPA) by narrowing the scope of the NPA central infrastructure services (CIS) contract. Pay.UK must secure this contract through a competitive tender. We are also consulting on the draft legal instruments we plan to give to implement our decisions.  

What is the NPA and why is it important? 

Interbank payments, payments made from one bank account to another, are essential to the day-to-day lives of millions and the functioning of the UK’s economy. We want the UK’s interbank payment systems to serve the diverse and evolving needs of everyone who uses them for many years to come.   

The NPA is the payment industry’s proposed way of organising the clearing and settlement of most interbank payments in the future, including those that currently use Bacs and Faster Payments. We support this initiative including because it will help deliver improved services that benefit people and businesses throughout the UK, like better payment tracking and the ability to send more information with payments.  

Pay.UK, the operator of Bacs and Faster Payments, is responsible for delivering the NPA. This includes procuring NPA CIS.   

Reducing risks to the delivery of the NPA 

The successful renewal of the UK’s interbank payments infrastructure will benefit people and businesses when making and receiving payments, but risks to its successful delivery need to be reduced.  

Earlier this year, through our monitoring of Pay.UK’s work and analysis of information it provided, we reached the view that there are unacceptably high risks that the NPA programme will not provide value for money and could delay or prevent the delivery of the benefits of the NPA.  

These risks prompted us to consult in February on requiring Pay.UK to phase the development of the NPA by narrowing the scope of the CIS contract.  

We also asked for views on the approach to the procurement.  

Most respondents broadly agreed with our assessment of the risks to successful delivery of the NPA and supported our preferred approach of narrowing the scope of the CIS contract to address these risks.   

Our decisions 

Having considered the responses, we will require Pay.UK to narrow the scope of the CIS contract by mandating that Pay.UK:  

  • must, as a minimum, buy services needed to support single-push payments (which will allow most Faster Payments transactions to migrate to the NPA)    
  • may buy additional services and system functionality only if the PSR does not object (which will include taking account of the adequacy of Pay.UK’s consultation with industry on its proposals)  

Our decision will help lower risks to the delivery of the NPA by simplifying the NPA programme. This will make it easier for Pay.UK to secure a contract that provides value for money and enables some NPA benefits to be realised sooner. Our decision also promotes competition and innovation.

The obligation on Pay.UK to carry out a competitive procurement will remain. Pay.UK can discharge this obligation by continuing the current competitive procurement or starting a new one.

A direct award is not the right way forward. We continue to have concerns about whether Pay.UK would have enough commercial leverage to secure good outcomes that support our regulatory objectives in a direct award. Moreover, Pay.UK’s analysis suggests this option would not be materially quicker than continuing the current competitive procurement. 

Specific directions 2 and 3 

To implement our decisions, we intend to vary Specific Directions (SDs) 2 and 3. These require Pay.UK to run a competitive procurement for the contract to supply central infrastructure for Bacs and Faster Payments respectively.   

What’s next?

We will consult until 10 September 2021 on the changes we propose to make to SDs 2 and 3 to implement our decisions. Having considered views, we plan to give the directions to vary SDs 2 and 3 later this year.  

We plan to publish a separate policy statement by the end of this year that sets out our regulatory framework for the NPA informed by feedback following the consultation on mitigating risks to competition and innovation relating to when the NPA is operational.  

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