The Bank of England has opened up the UK’s Real-Time Gross Settlement (RTGS) payment system to non-banking payment service providers (PSPs) in a bid to boost competition and innovation.
Non-bank PSPs will now be allowed to apply for a settlement account in the RTGS system, which manages bank-to-bank payments, that will give them direct access to the UK’s sterling payment systems that settle in sterling central bank money.
The move will allow non-bank PSPs to offer a wider array of payment services and will lower their dependency on banks for access to payment systems, the central bank said.
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The central bank is currently working with regulatory bodies and payment system operators to design a comprehensive risk management framework to ensure protection of RTGS service with the foray of new providers.
Non-bank PSPs are expected to start joining the RTGS service from 2018.
Bank of England Governor 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.”
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