The consolidation of UK payment system operators marks another big step in delivering on the New Payments Architecture.
Operational responsibility for the Bacs and Faster Payments systems, which process a combined £6.3 trillion worth of payments annually, has transferred to the New Payment System Operator (NPSO).
The successful consolidation of the operators (and planned consolidation of the Cheque and Credit Clearing Company in late 2018) has been a key focus for both the Payment Systems Regulator (PSR) and the Bank of England. Proponents argue that by bringing the operators together, the NPSO will help not only to simplify access to payment systems and promote competition, but will also help deliver other identified solutions (see What’s next?). As a single, primary deliverer of many of these solutions, the NPSO will be more efficient than the current three entities and it will be able to realise projects and their benefits more quickly and cost effectively. The consolidation plan has been articulated in the Payment System Operator Delivery Report issued in May 2017.
The NPSO works in the public interest to ensure the payment systems that the UK relies on for banking are safe, open, innovative, and resilient. Arguably, bringing the retail payment systems together is a key step in establishing a single voice for retail payments in the NPSO, which will reduce complexity and risk, and provide a platform for future competition and innovation.
Both the NPSO and New Payments Architecture were key proposals of the Payments Strategy Forum (PSF). The PSR established the PSF in 2015 to identify, prioritise, and develop strategic, collaborative initiatives to promote innovation in the interest of the people and organisations that use payment systems. The wider payments community identified the drivers behind the plan to consolidate the three main retail payment system operators. It was argued at the time that multiple payment systems are unnecessarily complex, time consuming, and costly for payments service providers to join and participate in, thereby affecting end users and stifling competition.
The PSF’s published blueprint for the future of UK payments includes a number of key future benefits for consumers, including, for example, Confirmation of Payee (allowing customers to verify that they are paying the person they intend) and Request to Pay (a mechanism through which a payee can send a request for payment to a payer) — services that the NPSO will support as delivery is developed in a competitive marketplace. Arguably, both of these will give consumers greater control of payments from their accounts and offer increased protection from fraud.