The UK's Faster Payments Scheme Limited (FPSL) recently rolled-out a first-of-its-kind 'open' operating environment for immediate payments through its New Access Model.*
Originally, only a handful of larger banks chose to adopt ‘direct member’ status to access the Faster Payments scheme, while the other 400 plus participants could gain indirect access through a direct member bank. With this approach, PSPs (payment service providers), challenger banks and other financial institutions were not able to offer customers a true, immediate payments experience since their transactions are processed via intermediary systems at the direct member bank, often falling short of real-time performance standards.
To eliminate these challenges and achieve ubiquity for all participants, FPSL introduced the New Access Model which offers additional options to achieve direct access to the UK Faster Payments scheme, at a lower investment by sharing infrastructure costs across multiple, often smaller, providers seeking the same real-time capability.
Beyond enabling shared connections and direct access to all, the aggregator approach also supports cloud offerings, making Faster Payments participation easier for PSPs and smaller banks who don’t have the internal IT and administration resources to manage its complexities.
Fundamentally this creates a practical, efficient means for every provider to fully leverage Faster Payments and ultimately offer instantaneous transactions to their customers, 24 hours a day/7 days a week.
FPSL envisioned that this revolutionary approach to level the competitive playing field would drive greater real-time innovation and the adoption by consumers and businesses. Based on the current pipeline of participants, the new model has already begun to turn this vision into a reality.
Leveraging the New Access Model, TransferWise, the international money transfer platform based on peer-to peer technology, announced earlier this year that it was the first tech company to gain direct access to UK Faster Payments. The integration was made possible with the help of ACI Worldwide as a ‘technical aggregator’ and Raphaels Bank as a technical partner and sponsoring bank. Turkish Bank (UK) Ltd. is another FS provider who announced plans to integrate into the UK scheme. The UK based bank will be using ACI’s aggregator service to connect to UK Faster Payments and will use ACI’s SaaS delivery model run from ACI’s new European data center.
I reached out to Mike Banyard, Head of Development, FPSL, and asked him what impact the New Access Model will have on the UK’s competitive landscape.
"The fact that customers of new FinTech companies are now profiting from real-time payments underlines the revolutionary contribution our New Access Model is starting to make.
“PSPs and banks of all shapes and sizes are becoming increasingly aware of the flexibility of a solution that makes the most strategic and economic sense to them, and its stirring up a new mix of providers. Momentum is building. Just for 2017 year we are expecting 8 new participants to connect to the scheme."
But the the New Access Model stands to influence far more disruption to the UK payments market.
"Independent research estimates the UK real-time payments market is likely to more than double in size over the next five years, with annualised growth of 20 percent forecast, leading to over 2.8 billion faster payments being sent in 2020 alone,” forecasts Mike.
In summary, there is big change in the air. My recommendation to payment players operating in the UK is don’t sleep on this. In the fast moving world that we now live in, the difference of milliseconds has a huge impact on your customer’s experience. Following the rules of ‘the early-movers advantage', the first PSPs to offer faster payments will be the winners.
I predict FPSL's new 'open and fair' access environment will offer similar guidance as it becomes the next de facto model for immediate payments in Europe, the US and beyond.
For more information view the recording of ACI’s webinar on meeting customer’s real-time expectations and growing market share using the New Access Model for UK Faster Payments.
Note to editors:
*The New Access Model, first published by UK Faster Payments in December 2014, sets out proposals to enable technology vendors to offer technical access to Payment Service Providers (PSPs) by adding to their existing accounting platform technology, or providing a managed solution to either a single or multiple PSPs.
About Barry Kislingbury
Barry has worked in the financial industry for nearly 30 years. Originally coming from an engineering background, he has designed and integrated market data distribution, financial messaging and payment systems around the globe. He later began supporting trading, banking, financial messaging and payment solutions, working with some of the largest banks in the world. Since joining ACI Worldwide, Barry is fully committed to global immediate payments solutions, implementation of standards and enabling real time systems around the world. Barry participates in several immediate payments groups, including the European Payments Councils Scheme Technical Forum, the EBA Real Time Forum and the ISO 20022 Real Time Payments Group.
About ACI Worldwide
ACI Worldwide, the Universal Payments (UP) company, powers electronic payments for more than 5,100 organisations around the world. More than 1,000 of the largest financial institutions and intermediaries as well as thousands of global merchants rely on ACI to execute USD 14 trillion each day in payments and securities. In addition, myriad organizations utilize our electronic bill presentment and payment services. Through our comprehensive suite of software and SaaS-based solutions, we deliver real-time, immediate payments capabilities and enable the industry’s most complete omnichannel payments experience.
About Faster Payments
Faster Payments is the only UK interbank payment system available day and night, 365 days per year, supporting the demands of personal and business customers to make payments from mobile, internet and telephone banking channels. In 2015, Faster Payments processed 1.24 billion payment transactions with a value of FBP 1,104 billion.
Faster Payments Scheme Limited (FPSL) is an independent limited by guarantee company established in 2011. The Scheme exists to develop, operate and enhance payment services based upon a shared 24/7 real-time infrastructure. FPSL is driven by the long-term needs and aspirations of customers, businesses, government, the third sector and all types of Payment Service Providers (PSPs) including challengers and incumbents. The Scheme operates on a fair and equitable cost recovery basis. It does not seek to make a financial return for its guarantors.
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