UK opens up payments systems to spur fintech

Uncategorized
| The European | 8 August 2017

The Bank of England has widened access to Britain’s interbank payments system to increase competition from new fintech firms in the financial system, where the ‘Big Four’ high street banks have long dominated.

The BoE flagged the plans in May this year and recently published a detailed framework to make this happen as more and more people use their phone to pay a bill or shuffle money between countries.

It allows new payments firms like those offering prepaid cash cards and prepaid online and mobile accounts, to have access to its “real time gross settlement” or RTGS payments system. Remittance firms, which allow people to send money overseas, and foreign exchange services are also included.

“This should support financial stability through greater diversity and risk-reducing payment technologies,” BoE Governor Mark Carney said in a statement.

The changes, which in practice will come into effect in 2018 once legislative changes have been completed, will enable such non-bank payments services providers (PSPs) to compete better with banks, the BoE said.

Currently, PSPs negotiate the use payments systems such as CHAPS, owned by big banks like HSBC, Barclays, Lloyds and RBS.

Reduced dependence on bank competitors for access to payment systems will allow the non-bank providers to offer a wider range of payments services, the BoE said.

Updated European Union payments rules will also make it easier for PSPs from January next year to compete with banks, such as by accessing data of account holders.

Over 50 banks and building societies in have settlement accounts with the BoE’s RTGS system.

There are around 450 non-bank payments services providers (PSPs) authorised by the Financial Conduct Authority, many drawn from the growing “fintech” or financial technology sector.

Britain is seeking to maintain its competitive edge in nurturing fintech firms, seen as a new source of jobs and growth. It has also set up a new payments systems regulator to prise open the sector to new entrants. A PSP will have to show it can comply with the BoE’s new framework for managing risks before it can join the payments system. It will have to demonstrate the customer money will be safe, and that all anti-money laundering checks are in place.

Sign Up

For the latest news

Download the App free today

Follow
your favourite
business magazine
while on the go.
Available on

Hard Copy and Digital

Magazine
Subscription

Get your
favourite magazine
delivered directly
to you

£49.95 4 issues

ISF

Report

Read
Information Security Forum’s
special report
exclusively here

Read report

Other Uncategorized Articles You May Like

Website Design Canterbury

Magazine

Hard Copy and Digital Subscription

Please complete the payment process in order to receive all 4 issues of The European Magazine digital edition or receive the hard copy directly to your door
As soon as payment is processed, the current digital edition will be emailed to you or dispatch to your postal address.

Annual Quarterly Subscription (4 Issues) Shipping Options