New Payments Architecture (NPA) regulatory framework published

The PSR have published their regulatory framework for the New Payments Architecture (NPA) central infrastructure services (CIS) following a consultation on the delivery and regulation of the NPA. 

The NPA framework has been developed taking account of responses to that consultation and aims to address risks to competition and innovation in the NPA ecosystem arising from the behaviour of a provider appointed to deliver the NPA CIS.

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.

Payment Systems Regulator

The PSR have published a paper entitled: New Payments Architecture (NPA) regulatory framework.

The focus of the framework is:

  • to set out requirements on both Pay.UK and a central infrastructure services (CIS) provider that will address risks to competition and innovation in the NPA ecosystem
  • to provide illustrative directions published to show how framework could be implemented.

The framework is designed to reduce the likelihood of the potential competition and behaviour risks occurring and help ensure that the NPA delivers outcomes that support our statutory objectives to promote competition, innovation and the interests of service-users.

Summary of requirements on Pay.UK:

  • be the primary interface and decision-maker for CIS provision
  • set CIS user prices, and do so using a methodology that has regard to certain pricing principles and is subject to our non-objection
  • set the rules and standards for NPA CIS, and ensure that these facilitate competition and innovation
  • ensure that CIS facilitate innovation and competition
  • ensure that a CIS provider does not use or disclose to any other party, including its affiliates, information and data for anything other than CIS provision
  • in a timely manner, make available to the market, information and data concerning the provision of CIS that would help facilitate competition or innovation.

Summary of requirements on a CIS provider if it (or an affiliate) has a significant interest in another payment system or in overlay services:

  • If a CIS provider (or an affiliate) has a significant interest in another payment system, or in overlay services, its CIS functions must be operationally separate from other parts of its (or an affiliate’s) business.
  • A CIS provider that is subject to this requirement must ensure that the operational separation implemented adheres to certain principles including that provision of CIS is not unduly influenced by a CIS provider’s or an affiliate’s interest in providing services other than CIS.

The PSR have published the regulatory framework now to provide clarity for stakeholders, particularly Pay.UK and potential CIS providers, about their intentions.

More: New Payments Architecture (NPA) regulatory framework.

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