Payment Systems Regulator publishes its regulatory framework for the New Payments Architecture (NPA)

09/12/2021

NPA

  • PSR sets out requirements on both Pay.UK and a central infrastructure services provider that will address risks to competition in payment services and between payment systems
  • Illustrative directions published to show how framework could be implemented

Today the Payment Systems Regulator (PSR) publishes its regulatory framework for the renewal of the UK’s interbank payments infrastructure that allows people and businesses to make payments from one payment account to another.

Earlier this year, the PSR consulted on reducing risks to competition and innovation once the NPA is operational. If these risks materialise, competition in payment services or between payment systems could be distorted or dampened, leading to higher prices, lower quality of service and less innovation.

Taking account of the responses the PSR received, today the regulator is publishing the regulatory framework it will implement to address the risks it identified.

Chris Hemsley, Managing Director of the PSR, said:

“The NPA is a significant opportunity to deliver an interbank infrastructure that meets the diverse and evolving needs of everybody who makes payments. Our work here is essential to make sure these systems are future proofed and work well.

“This framework provides clarity around the requirements on both Pay.UK and a provider of NPA central infrastructure services and their respective responsibilities to deliver a competitive payments market to the benefit of both people and business.”

The NPA is one of the biggest changes happening in UK payments. Whether paying employee wages, or transferring money to a friend using online banking, interbank payments are a key part of everyday life for businesses and consumers alike.

Delivered well, the NPA can boost competition in payment services that meet the needs of people and businesses. For this to happen, market participants need confidence that there is a level playing field and that the central infrastructure services (CIS) underpinning the NPA support competition and innovation.

In February the PSR consulted on proposals for the regulatory framework. Today, the PSR confirms these proposals by setting out more detail to provide clarity on the steps it will take to guard against risks a CIS provider distorts competition or stifles innovation.

The framework addresses these risks to competition by requiring that Pay.UK must:

  • be the primary interface and decision-maker for CIS provision
  • set CIS user price