24 September 2017
Find out more

Clamour for open access to UK payment systems grows louder

17 June 2016  |  10761 views  |  2 power leads

The provision of open access to UK payments systems is seen as a critical enabler for innovation in the financial services sector, but challenges over funding and the achievement of consensus among competing industry participants may stymie progress, says Payments UK in a new report.

Setting out the debate in its latest World Class Payments report, Payments UK explains that "‘Open Access’ is about achieving the optimum arrangements for the 2,500 PSPs that potentially need to access UK payment systems to enable them to be competitive and innovative without compromising the resilience and security of the payments infrastructure".

Currently, organisations wishing to provide users with facilities to make and receive payments can choose either Direct Access through a payment scheme or Indirect Access through a sponsor arrangement. PSPs who wish to offer a full range of services to their customers face the daunting prospect of making separate arrangements to join each of the UK four main payments networks - Bacs, Chaps, faster Payments and Link - as well as the major credit card schemes.

Outlining the challenge presented to new entrants, Metro Bank head of payment change Becky Clements states: "We feel that the existence of many similar systems with different rules and governance procedures is unnecessary and inefficient. The industry as a whole needs to work together to simplify the current landscape, saving financial service providers considerable time and resources dealing with the current complexity, and more time focussed on providing value to their customers.”

Both the UK's Payments Systems Regulator and strategy setting body the Payment Strategy Forum are reviewing access arrangements and the measures that need to be adopted to boost competition in the industry.

The Bank of England has also stepped into the breach, announcing plans to extend direct access to the UK's real-time gross settlement beyond the current set of firms, allowing a range of non-bank PSPs to compete on a level playing field with banks, a move which has been welcomed by PSR>

The Payments UK report identifies four main hurdles that have to be crossed in order to support the wider delivery of Open Access in the UK:
  • Industry agreement on the way forward and a commitment to deliver;
  • A carefully planned and managed transition plan would have to be agreed;
  • Consensus would have to be reached on the funding model to deliver change; and
  • Collaboration would have to be achieved between diverse and sometimes competing industry players across a divergent payments market.

Tim Yudin, Payments UK’s director of design and delivery, comments: “A clear conclusion from our work with both existing and potential users of payment systems in the UK has highlighted Open Access as a crucial enabler to support healthy competition and innovation in the industry. Delivering further improvements to enable access to payment systems does not come without its challenges, but achieving it would boost competition which will, in turn, ultimately benefit customers.”

Read the full report:» Download the document now 1.3 mb (PDF File)

Comments: (2)

A Finextra member
A Finextra member | 17 June, 2016, 15:35

As a private individual in the UK with a regular UK bank account I have no problem in paying any individual or company immediately through faster payments, unlike most of the world, including the USA. So why all of this waffle? How about a few lines to describe the problem (and the solution) rather than 5,000 words.

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
A Finextra member
A Finextra member | 20 June, 2016, 08:59

The UK faster payments scheme was leading edge 9 yes ago when it went live. It's now looking tired compared with new schemes being designed and built globally. Functions like request to pay and confirmation of recipient, message format that can include additional data to make the scheme much better for B2B payments and the provision of services. The myriad of UK schemes and difficulty in obtaining a Bank of England settlement account also inhibits participation for non banks (to the detriment of all consumers,  

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Finextra news in your inbox

For Finextra's free daily newsletter, breaking news flashes and weekly jobs board: sign up now

Related stories

UK competition body to keep a watchful eye on interbank payments progress

UK competition body to keep a watchful eye on interbank payments progress

10 March 2016  |  6920 views  |  0 comments | 10 tweets | 9 linkedin
PSR calls for further improvements in access to UK payment systems

PSR calls for further improvements in access to UK payment systems

15 December 2015  |  6243 views  |  0 comments | 6 tweets | 5 linkedin
Faster Payments eases access for challengers with new settlement model

Faster Payments eases access for challengers with new settlement model

05 October 2015  |  8314 views  |  5 comments | 20 tweets | 26 linkedin
Payments UK sets out vision for 'world class' services

Payments UK sets out vision for 'world class' services

28 August 2015  |  11327 views  |  0 comments | 17 tweets | 11 linkedin
Fintech firms sign up for new Faster Payments access model

Fintech firms sign up for new Faster Payments access model

11 May 2015  |  11619 views  |  1 comments | 21 tweets | 17 linkedin
Chaps lowers fees in bid to attract new members

Chaps lowers fees in bid to attract new members

22 January 2015  |  5714 views  |  1 comments | 2 tweets | 5 linkedin
Faster Payments to ease access for PSPs and tech companies

Faster Payments to ease access for PSPs and tech companies

08 December 2014  |  11210 views  |  2 comments | 16 tweets | 9 linkedin
New UK payments watchdog proposes tough regime

New UK payments watchdog proposes tough regime

13 November 2014  |  10991 views  |  6 comments | 18 tweets | 26 linkedin

Related company news

 

Related blogs

Create a blog about this story (membership required)
visit www.capgemini.comdownload the paper nowvisit www.vasco.com

Top topics

Most viewed Most shared
HSBC switches on selfie payments in ChinaHSBC switches on selfie payments in China
13316 views comments | 28 tweets | 44 linkedin
AXA launches blockchain to cover late flight compensationAXA launches blockchain to cover late flig...
9573 views comments | 13 tweets | 28 linkedin
Apple P2P payments service nears launchApple P2P payments service nears launch
8564 views comments | 19 tweets | 27 linkedin
SBI Ripple Asia advances on South KoreaSBI Ripple Asia advances on South Korea
8266 views comments | 16 tweets | 1 linkedin
European Commission makes fintech a priority in supervisory shakeupEuropean Commission makes fintech a priori...
8037 views comments | 32 tweets | 45 linkedin

Featured job

Competitive
New York, NY - USA (some flexibility on location)

Find your next job