The Bank of England (BoE) has announced that the first non-bank payment service provider (PSP) has joined a UK payment system settling in central bank money. TransferWise, a Financial Conduct Authority-regulated PSP facilitating the international transfer of payments, is now a direct participant in the UK’s Faster Payments system.

A key component of this work involved the BoE extending settlement account access in its Real-Time Gross Settlement (RTGS) system to non-bank PSPs such as TransferWise. Wider access is expected to bring financial stability benefits through increasing the proportion of settlement in central bank money, diversifying the number of settlement firms, and driving greater innovation in risk-reducing payments technologies.

Last July the BoE announced that non-bank PSPs were eligible to apply for a settlement account in the RTGS system, enabling non-bank PSPs to directly access the UK payment schemes that settle in central bank money for the first time, including Faster Payments, Bacs, CHAPS, LINK, Visa, and the new digital cheque imaging system.

With an increasing number of payments being made through the new RTGS system, the BoE anticipates that widening access to CHAPS and payment schemes that settle over RTGS will help to increase competition and innovation in the provision of payment services. This work also supports the objectives of the Payment Systems Regulator and FCA in promoting effective competition and innovation in the market for payment services in the interests of consumers.

BoE governor Mark Carney commented: “By stimulating competition and innovation, we anticipate increased diversity and risk-reducing payment technologies will reinforce financial stability while enhancing customer service.”

Andrew Bailey, chief executive of the FCA, stated: “Our approach to supervising firms like TransferWise means that they can safely access the BoE’s payment systems and so contribute to a thriving and dynamic marketplace for UK consumers.”

The Payment Systems Regulator’s managing director Hannah Nixon added: “More non-bank PSPs participating directly will lead to greater competition and innovation improvements in our payment systems, and the products and services that will become available for all of us to use on a daily basis.”

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