The UK's Payment Systems Regulator has hailed the success of its drive to open up access to the country's interbank payments plumbing, but says more needs to be done to ensure fair and open access and to deliver effective competition and innovation.
The annual ‘Access and Governance of Payment Systems’ report, which reviews the progress of the regulator’s open access programme, notes that as many as ten new providers could gain direct access to the interbank payment systems this year.
Hannah Nixon, PSR managing director says: "We expect this year will be the most successful, with more challenger banks and fintech companies expected to gain either direct or more innovative ways of accessing the interbank payment systems than in any other year. They’ll also be able to do this cheaper and quicker than ever before.’
According to the PSR report, the banking and payments industry saw some groundbreaking milestones in recent months, for instance Raphaels Bank, Metro Bank, Starling Bank, ClearBank and Monzo becoming the first new joiners to Faster Payments since it launched in 2008. It also expects the entry of three new providers of indirect access to payment systems this year, ClearBank, Raphaels Bank and BFC Bank.
The cost of getting direct access also appears to be reducing. In 2015, payment service providers (PSPs) projected the upfront cost of access could be in the range of £2.5 to £4 million. Recent entrants have estimated their bills as standing between £1.2 to £2.5 million.
Although progress has been encouraging, the PSR is pushing for a number of further improvements, including the completion of work in developing aggregator access models for financial technology vendors by the end of the 2017. Operators should also be ready to progress applications for direct access to non-bank PSPs, says the PSR, in anticipation of the Bank of England amending its settlement account policy and where necessary legislative changes are made