The Bank of England has announced that it will be opening direct access to RTGS accounts to non-bank payment service providers (PSPs).

This enables non-bank PSPs to apply 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 the new digital cheque imaging system, when it goes live.

This policy change, according to the Bank of England, “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”.

The move aims to enable non-bank PSPs to compete on a more level playing field with incumbents, and allow them to offer a wider range of payment services. These factors will all help to increase competition and innovation in the provision of payments services.

Mark Carney, governor of the Bank of England, said: “I am delighted that the Bank of England, the FCA and HM Treasury are working together to stimulate competition and innovation in payment services by widening access to the UK’s payment systems to non-bank payment service providers. In parallel this should support financial stability through greater diversity and risk-reducing payment technologies.”

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 in 2018.

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