The UK Payment Systems Regulator (PSR) is now consulting the industry, after setting out ways to reduce risks in the successful overhaul of the country's interbank payment systems and meet growing demand for digital payments.

The UK’s New Payments Architecture (NPA) is the payment industry’s proposed way of organising the clearing and settlement of most interbank payments (payments that are made from one bank account to another) in the future - including those that currently use Bacs and Faster Payments.

Pay.UK, the operator of Bacs and Faster Payments, is responsible for managing the delivery of the NPA.

“The NPA represents a significant opportunity to meet growing demand for digital payments, further improve resilience and support increased competition, to benefit people and businesses across the UK,” said PSR.

To make sure these benefits are delivered, the PSR wants to lower risks to the delivery of the NPA as well as make sure it operates in a way that benefits everyone who uses it.

It says: “There are unacceptably high risks that the current NPA programme will not provide value for money and could stifle competition which could, in turn, delay the development of products and services that benefit people and businesses.”

To lower the risks to the delivery of the NPA, the regulator is seeking views on limiting the initial central infrastructure contract to only those services that are “most important” to its successful launch.

The PSR is also consulting on the best way to support competition and innovation when the NPA is operational, including the role of the PSR’s regulation of the NPA and the firm providing the systems and infrastructure.

Proposals include that Pay.UK acts as a single point of contact for payment firms, so that commercially sensitive information does not pass to the central infrastructure provider.

The PSR is also proposing that the central infrastructure provider is operationally separate from parts of any wider business which could benefit from unfair competitive advantage in payment markets.

Chris Hemsley, managing director of the PSR, said: “It is critical that Pay.UK’s work to update this key part of our payments infrastructure delivers effectively, including by supporting new, innovative ways to pay and greater competition in payments.

“We have set out proposals that would change how Pay.UK achieves this upgrade, by simplifying what is delivered and focusing on the investment that will have the most impact.”

He added: “We have also set out how our regulation will protect people and businesses, including by ensuring that there is fair competition in the provision of new payment services delivered using the new infrastructure.”

The industry has until 19 March 2021 to respond on outlined risks, and until 5 May 2021 on pricing and competition.

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