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2017. “Whatever our final decision, it will be made based on the evidence gathered and the best interest of the payments industry,” adds Nixon.
The UK payments industry has already begun responding. Operators FPSL have launched a “new access model” to FPS based on an accredited ‘trust mark’, for technical aggregators, and awarded Ascert a contract to run the cloud-hosted accreditation service. It cuts the time taken to complete end-to-end tests to 15 minutes for FinTech firms.
Two companies have gained the ‘trust mark’, FIS and PayPort, after passing all the required technical tests covering the origination and receipt of payments by a direct participant of Faster Payments. The latter is an access service run by VocaLink.
A further four ‘FinTech’ aggregators are in the final stages of testing, with a dozen PSPs said to interested in their services. FPSL also claims a number of challenger banks are lined up to connect directly this year, including Raphael’s Bank and a number of other smaller players that are seeking a banking licence. Whether this “new access model” meets with the approval of the PSR remains to be seen. The ramifications of its investigations into the future of Bacs and LINK are also open to debate.
According to Andrew Williams-Fry, Chief Regulatory Officer at VocaLink, PayPort directly addresses the need for competition as identified by the PSR. It’s also a useful model if VocaLink’s ownership structure is changed. He added: “PayPort enables competition by allowing businesses to access the Faster Payment infrastructure and play a part in shaping the payments landscape for the better.”
The FPS in the UK has processed five billion+ near real-time transactions since its launch in 2008. The early real-time platform pioneer recognises payments in seconds but unlike some newer systems around the world, such as in Australia where the SWIFT designed and operated New Payment Platform (NPP) is due in 2017, settlement can follow an hour or two later
depending when it hits the three UK settlement cycles run per day.
FPS runs on the old ISO 8583 card and ATM messaging standard due to its early launch. Additional services such as corporate access, the Zapp digital payment app and launch of the Paym mobile payment network, using the FPS/LINK backbone, have all followed.
Certainty of ownership and return on investment – either monetarily or commercially in terms of retaining users against competition from newcomers – is deemed necessary by some banks to ensure funding for innovation. But the PSR is not convinced. Reliability, cyber security and resiliency concerns about changing the governance have not altered the regulator’s proposals to break-up VocaLink’s bank-owned structure.
The latter has leveraged its faster payments knowledge to go on to provide real-time technology and advice to the FAST real-time system in Singapore, which uses the more modern ISO 20022 messaging with its 140+ characters for data-rich payments and international interoperability. The firm is also helping many other nations in the real-time field to forge ahead, such as in Thailand, where it has signed a letter of intent to deliver a real-time system. Other payment processors and tech providers, such as Equens in the Netherlands, are also looking for business abroad and searching for volume to help economies-of-scale and investment budgets.
In the US, VocaLink is assisting The Clearing House (TCH), alongside FIS and other technology processing firms, under the auspices of the US Federal Reserve Bank, in designing a real-time system there by the end of 2017. All these newer launches will use ISO 20022 messaging. VocaLink’s non-UK reach will mean the proposed break-up by the UK regulator will garner international attention.
The euroland’s Single Euro Payments Area (SEPA) Instant Credit Transfer (SCT Inst) scheme being designed under the auspices of the European Payments Council (EPC), will also likely use ISO 20022 messaging, as the basis for an EU faster payments solution due in 2017. France’s
www.ibsintelligence.com © IBS Intelligence 2016
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