PSR Consultation on delivery and regulation of the New Payments Architecture

The PSR are consulting on ways to reduce risks to the successful renewal of the UK’s interbank payment systems and proposals to mitigate risks to competition and innovation.

Each year, millions of us  collectively make billions of interbank payments worth trillions of pounds. Whether receiving wages or paying bills (via Bacs/Direct Debit), or using a smart phone to send money to a friend (via Faster Payments), interbank payments are essential to the smooth running of our day-to-day lives and the functioning of the UK’s economy. 

Getting the NPA right is therefore hugely important. 

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. 

The PSR think that, currently, there are unacceptably high risks that the current NPA programme will: 

  • not provide value for money  
  • stifle competition and innovation in payment services 
  • delay realisation of the benefits of the NPA 

The regulator remains concerned about risks to competition and innovation relating to when the NPA is operational, and how this may affect the quality, range and pricing of payment services delivered using the NPA.

The PSR are seeking views on narrowing the scope of the initial contract for delivery to those NPA services that will provide an enhanced immediate payments service and enable Faster Payments transactions to move to the NPA. They are also seeking views on the appropriate way to secure this contract.

The PSR are also consulting on reducing risks to competition and innovation in the NPA.  The consultation sets out the PSR’s proposals for managing these risks, including:  

Specific mitigations to ensure that: 

  • Pay.UK procures effectively
  • Central infrastructure services (CIS) user prices are set using proportionate, objective and non-discriminatory (POND) criteria 
  • There are contractual provisions in place that guarantee minimum levels of service quality, place restrictions on information and data sharing, and promote and facilitate innovation.

Governance principles to ensure that:  

  • Pay.UK is the primary interface and decision-maker for all matters relating to CIS provision  
  • Pay.UK actively implements rules to promote competition and ensure access terms are POND
  • If a CIS provider (or its owner) has a significant interest in another payment system that competes with interbank payments or in the NPA’s competitive overlay markets, its CIS functions are operationally separate .

Deadline dates:

  • 19 March 2021 – deadline for comments on questions to 6 of the consultation (and other comments on risks to the delivery of the NPA and options for reducing these).
  • 5 May 2021 – deadline for comments on questions to 14  of the consultation (and other comments on competition and pricing). 

 More: CP21/2 – Consultation on delivery and regulation of the New Payments Architecture.

Experience the future Northey Point Limited

This episode is also available as a blog post:
  1. Experience the future
  2. Fraud & Confirmation of Payee
  3. Cash and Covid – Leaving no one behind
  4. Why Request to Pay is as easy as plug and play
  5. Will you visit an ATM this week?

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