Interoperable Systems And Data At The Heart Of Plans To Modernise UK Payments Infrastructure

A major overhaul of the infrastructure that supports existing payment systems in the UK will be implemented from early 2021. Under the plan existing systems for Bacs, Faster Payments and Cheque and Credit Clearing will be "closed down" before 2025.

Future payments architecture will be interoperable, with the use of application programme interfaces (APIs) and common messaging standards envisaged to enable different systems to interact, according to the plans published by a group attached to the Payment Services Regulator (PSR).

New features will also be developed to make more data available alongside payments and to use information to combat fraud, along with a new 'request to pay' service, they said. The new payment system would also be operated under a new governance framework as the operation of the Bacs, Faster Payments and the Cheque and Credit Clearing payment systems is merged.

The proposals, set out by the Payments Strategy Forum, build on a strategy for reform it published late last year, and seek to further develop ongoing initiatives being worked on by industry on open banking and the enabling of third party access to payment accounts and payment account data under revised EU payment services laws.

Banking and payments law expert Tony Anderson of Pinsent Masons, the law firm behind Out-Law.com, said: "The plans proposed by the Payments Strategy Forum are both ambitious and revolutionary and will hopefully create a much more efficient and democratic infrastructure for payments methodology within the UK. However, do they create substantial additional risks at a time when cybersecurity is facing intense scrutiny? Less than 0.5% of 1.9 million cyber crimes committed in the UK during the last financial year were successfully prosecuted."

"The further work the Forum intends to undertake to address the potential risks and liabilities associated with the new services will be crucial to their ultimate viability," he said.

The implementation plan the Forum is now consulting on is backed by the UK's Payment Systems Regulator (PSR), which previously tasked the Forum with outlining a plan to "unlock competition and innovation in payments".

The new proposals contain more detail of the way some of the recommendations previously made by the Forum would be designed. The Forum said the proposed reforms "provides an opportunity to address historical problems of slow innovation, concentration of ownership and control of payment systems".

"The...

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