Payments industry and regulatory round up
Issue 221 | 16 December 2021
Welcome to issue 221 of Payments:Unpacked, this premium subscriber edition provides a fortnightly round-up of payment related developments at Pay.UK, the Payment Systems Regulator, the Bank of England, HM Treasury, the FCA and the Open Banking Implementation Entity.
Period covered: 1 to 16 December 2021.
Pay.UK
Second standards technical collateral release for the Next Generation Standard for UK retail payments
Pay.UK have produced the second ‘collection’ of standards collateral, leading on from the first that were made available in July. They also expect to publish a third collection early in 2022, before baselining the collateral and making it subject to change control shortly after.
The New Payments Architecture (NPA) will unlock significant benefits for many businesses and personal customers within the UK, helping transform the way they control their professional and personal transactions, and creating a wealth of innovation opportunities. The new standard paves the way for richer and more meaningful exchanges of information within UK payments.
Since Collection 1 was published, Pay.UK have been gradually updating the collateral as the NPA design evolved. This latest release includes uplifted content to that in the first collection and now additional ISO 20022 message sets.
The collateral remains in draft form and not for implementation at this stage. However, it should enable Pay.UK’s customers and organisations, where appropriate, to undertake any necessary business impact assessments to work with the new standard and the ISO 20022 message sets used by the NPA.
The standard allows for significantly enhanced data exchange; richer information through an increased quality and quantity of data will lead to improved benefits and substantial opportunities for innovation in the payments’ ecosystem and beyond – from banks and financial institutions to businesses and personal customers.
For relevant organisations, the materials are available for download through the Pay.UK standards portal, Standards Source, for those with existing access. Or, for relevant organisation requiring new access, contact standards@wearepay.uk.
Plan ahead and get those Christmas payments wrapped up early
Pay.UK, which runs the Bacs Direct Credit and Direct Debit payment systems, is providing useful advice and tips to help organisations, large and small, to plan ahead of the additional non-payment processing days over the festive period – including a reminder that payment files can be submitted up to 30 days in advance.
This flexibility may be especially helpful this year, given that Christmas and Boxing Day fall over a weekend, meaning that subsequent bank holidays will follow on the Monday and Tuesday (27 and 28 December). In the same way, Monday 3 January will also be a non-processing day as a result of New Year’s Day falling on a Saturday.
That means that if salaries, supplier payments, or bills are due to be paid or collected on Christmas Eve (Friday 24 December), then the latest date you can submit your Bacs payment files is Wednesday 22 December.
If funds are due to be debited / credited on the first official working day after Christmas – Wednesday 29 December – then payment files must be submitted no later than Thursday 23 December.
And, for payments due before the end of the year, the submission process must begin by Wednesday 29 December at the latest. If payments are due on the first working day after the New Year celebrations (Tuesday 4 January 2022), then the deadline for submitting payment files is Thursday 30 December.
Some top festive payments tips:
Make sure you’ve downloaded our handy 2021 processing calendar and share with colleagues who may benefit from a quick reference guide to festive payment dates
Plan ahead and where possible submit files early – remember that you can do this up to 30 days in advance
Check that files have been submitted with the correct processing dates, taking into account the additional bank holidays, and ensure your software reflects Bacs non-processing days
Consider asking another member of staff to help in reviewing submission dates
We know that the festive period is a particularly busy time, so with less staff likely to be working over Christmas and New Year, review contingency plans for any unforeseen absences
It’s a phrase we’ve had to become accustomed to, but as many workplaces are still operating in a ‘new normal’, with staff based remotely in many cases, now might be a good time to review if all those who may need to submit payment files have the equipment they require
Remember that you can get more information from bacs.co.uk and www.wearepay.uk.
More: The 2022 Bacs processing calendar is also now available to download.
Pay.UK launches Gender Pay Gap report
Download Pay.UK’s first Gender pay gap report and is a snapshot from 5 April 2021 when their permanent and fixed-term contract employees exceeded 250.
Download: Gender pay gap report 2021
Current account balances and current account switching – what’s the relationship?
Since the Current Account Switch Service was launched in 2013 the service has helped over seven million people and small businesses move to bank accounts that better suit their needs. The research that Pay.UK have done in the last eight years has helped them to understand why people switch and why some people don’t.
Working with the Competition and Markets Authority during their review into retail banking led Pay.UK to have a special focus on the groups of people who could benefit most from changing their bank account, but who are least likely to do so: those aged 18 to 24, the financially vulnerable and small businesses.
The other group who are likely to benefit most, and therefore required focus, were people with “High Credit Balances”, representing people with an average current account balance of over £15,000, seven percent of all current account customers.
People with this amount of money in their current account wouldn’t be on the top of everyone’s list of people who need help with their banking. However, understanding more about this group of current account holders and what their priorities are when choosing a current account helps us to complete the picture of how switching works.
Pay.UK wanted to understand three things from the research:
Do people with high credit balances consider switching?
How does their awareness of the Current Account Switch Service compare with other people?
Are there distinct features that make their behaviour different from other people considering switching and are these factors things we need to consider?
More: Current account balances and current account switching – what’s the relationship?
Payment Systems Regulator
New Payments Architecture (NPA) regulatory framework published
The PSR have published their regulatory framework for the New Payments Architecture (NPA) central infrastructure services (CIS) following a consultation on the delivery and regulation of the NPA.
The NPA framework has been developed taking account of responses to that consultation and aims to address risks to competition and innovation in the NPA ecosystem arising from the behaviour of a provider appointed to deliver the NPA CIS.
What is the NPA and why is it important?
The NPA is one of the biggest changes happening in UK payments. It is the payment industry’s proposed way of organising the clearing and settlement of most UK interbank payments in the future. Whether paying employee wages, or transferring money to a friend using internet banking, interbank payments are a key part of everyday life for businesses and consumers alike.
Delivered well, the NPA can help realise the outcomes we want to bring about in payments and facilitate our proposed long-term strategy. By strengthening competition and innovation in payment services and between payment systems, the NPA can help provide better value and effective choice of payment options for people and businesses. The NPA can also improve the resilience of payments and, by enabling more data to be included in payment messages, help reduce fraud.
Pay.UK, the operator of Bacs and Faster Payments, is responsible for delivery of the NPA.
Our role is to monitor Pay.UK’s work to deliver the NPA and, where appropriate, use our powers to assure an outcome that supports our statutory objectives to promote competition, innovation and the interest of service users.
Payment Systems Regulator
The PSR have published a paper entitled: New Payments Architecture (NPA) regulatory framework.
The focus of the framework is:
to set out requirements on both Pay.UK and a central infrastructure services (CIS) provider that will address risks to competition and innovation in the NPA ecosystem
to provide illustrative directions published to show how framework could be implemented.
The framework is designed to reduce the likelihood of the potential competition and behaviour risks occurring and help ensure that the NPA delivers outcomes that support our statutory objectives to promote competition, innovation and the interests of service-users.
Summary of requirements on Pay.UK:
be the primary interface and decision-maker for CIS provision
set CIS user prices, and do so using a methodology that has regard to certain pricing principles and is subject to our non-objection
set the rules and standards for NPA CIS, and ensure that these facilitate competition and innovation
ensure that CIS facilitate innovation and competition
ensure that a CIS provider does not use or disclose to any other party, including its affiliates, information and data for anything other than CIS provision
in a timely manner, make available to the market, information and data concerning the provision of CIS that would help facilitate competition or innovation.
Summary of requirements on a CIS provider if it (or an affiliate) has a significant interest in another payment system or in overlay services:
If a CIS provider (or an affiliate) has a significant interest in another payment system, or in overlay services, its CIS functions must be operationally separate from other parts of its (or an affiliate’s) business.
A CIS provider that is subject to this requirement must ensure that the operational separation implemented adheres to certain principles including that provision of CIS is not unduly influenced by a CIS provider’s or an affiliate’s interest in providing services other than CIS.
The PSR have published the regulatory framework now to provide clarity for stakeholders, particularly Pay.UK and potential CIS providers, about their intentions.
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