PSR RP21/2: Lowering risks to the New Payments Architecture (NPA) delivery – final changes to Specific Directions 2 and 3

We have published our decision on the variations of Specific Directions 2 and 3. (SD2 and SD3). The revised directions come following our consultation earlier this year on the changes we proposed to make to these directions to implement its decisions on lowering risks to successful delivery of the New Payments Architecture (NPA) (CP21/8).

In CP21/8, we proposed to give directions (SDs 2a and 3a) varying SDs 2 and 3. The PSR has now given SDs 2a and 3a to Pay.UK. There are three substantive changes from the draft versions of SDs 2a and 3a consulted on. We have:

• changed the SD2 reporting requirements so that Pay.UK must submit a plan for developing the Bacs strategy to the PSR by 31 March 2023 and then submit subsequent reports on progress within nine months of the previous report
• moved the SD3 compliance deadline to 1 July 2026 (rather than 1 April as originally proposed) to provide for some additional contingency given there is less certainty about the baseline plan upon which the deadline is based
• reinstated provisions in SDs 2 and 3 that allow us to amend the compliance deadlines for those directions recognise that with a programme of the size and scale of the NPA, factors outside of Pay.UK’s direct control could arise that mean it is unable to meet these deadlines

What is the NPA and why is it important?

The NPA is one of the biggest changes happening in UK payments. It is the payment industry’s proposed way of organising the clearing and settlement of most UK interbank payments in the future. Whether paying employee wages, or transferring money to a friend using internet banking, interbank payments are a key part of everyday life for businesses and consumers alike.

Delivered well, the NPA can help realise the outcomes we want to bring about in payments and facilitate our proposed long-term strategy. By strengthening competition and innovation in payment services and between payment systems, the NPA can help provide better value and effective choice of payment options for people and businesses. The NPA can also improve the resilience of payments and, by enabling more data to be included in payment messages, help reduce fraud.

Pay.UK, the operator of Bacs and Faster Payments, is responsible for delivery of the NPA.

Our role is to monitor Pay.UK’s work to deliver the NPA and, where appropriate, use our powers to assure an outcome that supports our statutory objectives to promote competition, innovation and the interest of service users.

Next steps

The changes implemented as a result of the new SDs 2 and 3 come into force on 1 January 2022 and the PSR will carefully monitor Pay.UK’s compliance with the requirements of the updated directions.