The Bank of England is announcing that a new generation of non-bank payment service providers is now eligible to apply for a settlement account in the Bank’s RTGS system.
Holding their own settlement account at the Bank enables these non-bank PSPs to apply, for the first time, for direct access to the UK’s sterling payment systems that settle in sterling central bank money, including Faster Payments, Bacs, CHAPS, LINK, Visa, and, once live, the new digital cheque imaging system.
Publishing a revised Settlement Account Policy that includes non-bank PSPs delivers on a commitment made by the Governor of the Bank of England in summer 2016. This policy change is designed to ensure that the UK’s payments infrastructure keeps pace with the changing structure of the financial system. It marks the first step in a much broader renewal programme designed to deliver a materially stronger, more resilient, flexible and innovative sterling settlement system for the United Kingdom in the years ahead.
These changes will enable non-bank PSPs to compete on a more level playing field with banks. In turn, reduced dependence on bank competitors for access to payment systems will allow non-bank PSPs to offer a wider range of payment services. These factors will all help to increase competition and innovation in the provision of payments services. In the longer term, the innovation which stems from this expanded access should promote financial stability by:
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creating more diverse payment arrangements with fewer single points of failure;
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identifying and developing new risk-reducing technologies; and
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expanding the range of transactions that can take place electronically and be settled in central bank money.
At the same time, as the Governor made clear last summer, these benefits cannot be allowed to come at the cost of reduced resilience of RTGS. That is why the Bank has been working over the past year with the Financial Conduct Authority (FCA), HM Treasury, HM Revenue & Customs, the Payment Systems Regulator (PSR) and the payment system operators to develop a comprehensive risk management framework to ensure the continued resilience of the Bank’s RTGS service.
Before non-bank PSPs can open a settlement account, they will need to demonstrate compliance with this risk management framework. A number of legislative changes also need to complete their passage through Parliament. As a consequence, the Bank’s expectation is that the first non-bank PSPs will join RTGS during 2018.
Press release
© Bank of England
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