NPA – Core Clearing and Settlement
The backbone of the New Payments Architecture (NPA) will be a new core clearing and settlement layer, which will enable money to move every time we pay a bill, pay back a friend, or a business pays its supplier – regardless of whether it’s an online banking payment, Direct Debit or a cheque.
Faster Payments, Bacs and cheque payments have historically been processed using separate infrastructures – meaning there has been a mix of rules, standards and processes to follow. Bringing all of these payment schemes together in the NPSO has created an historic opportunity to rebuild the core clearing and settlement infrastructure from the bottom up, simplifying requirements for Payment Service Providers (PSPs) through interoperability and catalysing innovation.
NPA – Procuring the Core Infrastructure
The NPSO is working to competitively procure a strategic partner to deliver and operate the UK’s NPA core clearing and settlement infrastructure.
The core clearing and settlement layer, which will process more than £6.7 trillion worth of payments every year, is forecast for implementation after 2021. The NPA will create a new framework that will allow new ‘overlay services’ to be easily developed, leading to greater competition and innovation, with new and better payments products and services.
The development of the procurement approach for the NPA is currently with the Bank of England and the PSR for their comments.
We will continue to engage with the market throughout the procurement process for the core, to ensure that the procurement strategy and approach is well received and that it will be technically and commercially viable. This will ensure that there are an appropriate number of suppliers with capacity and capability to deliver the services to ensure a robust competition.
NPA Rules and Standards
There are two sides to every payment – a payer and payee that typically hold accounts with different PSPs. This means that for payments to work for consumers and businesses all stakeholders in the system must follow the rules, standards and regulations that underpin payment systems and therefore payments are not just about technology
So, while the NPSO will procure and operate the clearing and settlement layer of the New Payments Architecture (NPA), its responsibilities for other layers of the ecosystem will be focussed on standards, rules, governance and licensing access to the clearing and settlement platform. The NPSO will also issue best practice guidelines to help ensure consumers and businesses get the best possible user journey from the various products and services that will utilise the NPA.
The various documents that make up the specification for the NPA’s core clearing and settlement layer are currently in development, and are expected to be published in 2019.
In parallel with the activity to define, procure and implement a new clearing and settlement engine for the NPA, the ‘scheme rules’ for the NPA are being developed to support wider competition and innovation opportunities.