The Bank of England has extended direct access to Real Time Gross Settlement (RTGS) accounts to non-bank payment service providers as part of a wide-ranging effort to inject more competition and innovation into the UK’s payments systems.
The widely-trailed move is expected to open up a competitive space which has long been the preserve of the UK’s biggest incumbents, providing non-bank payment service providers (PSPs) with direct access to the UK’s sterling payment systems that settle in central bank money, including Faster Payments, Bacs, Chaps, Link, Visa, and the new digital cheque imaging system.
The initiative coincides with the central bank’s plans to rebuild its real-time gross settlement platform to accommodate new market entrants and future-proof the network for new technology developments and payment instruments.
Bank of England chief Mark Carney says the changes will enable non-bank PSPs to compete on a more level playing field with banks and support financial stability through greater diversity with fewer single points of failure.
The Bank is currently consulting with other regulatory and Government bodies to draw up a comprehensive risk management framework to protect the country’s payments infrastructure as new providers enter the market. Any new participants will be expected to demonstrate compliance with the rules.
The Bank expects the first non-bank provider will join the RTGS in 2018, following legislative changes that need to pass through Parliament.