With the aim of increasing competition from new fintech firms in the financial system, where the "Big Four" high street banks have long dominated, the Bank of England has widened access to Britain's interbank payments system with the country.
With the undeniable fact, supported by many surveys and studies that more and more people are using their phone to pay a bill or shuffle money between countries, the BoE flagged the plans in May and on Wednesday published a detailed framework to make this happen.
Access to its "real time gross settlement" or RTGS payments system would be allowed by the new framework for new payments firms like those offering prepaid cash cards and prepaid online and mobile accounts. And also included in this list of firms and businesses are firms providing foreign exchange services and remittance firms, which allow people to send money overseas.
"This should support financial stability through greater diversity and risk-reducing payment technologies," BoE Governor Mark Carney said in a statement.
The BoE said that it is expected that the changes will enable such non-bank payments services providers (PSPs) to compete better with banks after the framework comes into practice and will come into effect in 2018 once legislative changes have been completed.
At present, payments systems such as CHAPS, owned by big banks like HSBC, Barclays, Lloyds and RBS, are negotiated by the PSPs.
The BoE said that the non-bank providers to offer a wider range of payments services would be allowed to reduce their dependence on bank competitors for access to payment systems.
In order to compete with banks, such as by accessing data of account holders, from January next year, it will also be made easier for the PSPs because of updated European Union payments rules.
Settlement accounts with the BoE's RTGS system exists for over 50 banks and building societies.
Including many drawn from the growing "fintech" or financial technology sector, there are around 450 non-bank payments services providers (PSPs) authorized by the Financial Conduct Authority.
In Britain, especially in London, fintech firms are seen as a new source of jobs and growth and in recent months, Britain is seeking to maintain its competitive edge in nurturing such fintech firms. And additionally, in order to prise open the sector to new entrants, this measure will also help set up a new payments systems regulator.
However, before it can join the payments system, a PSP will have to show it can comply with the BoE's new framework for managing risks. It will have to adequately exhibit too the BoE that all anti-money laundering checks are in place and will have to demonstrate the customer money will be safe.
(Source:www.reuters.com)
With the undeniable fact, supported by many surveys and studies that more and more people are using their phone to pay a bill or shuffle money between countries, the BoE flagged the plans in May and on Wednesday published a detailed framework to make this happen.
Access to its "real time gross settlement" or RTGS payments system would be allowed by the new framework for new payments firms like those offering prepaid cash cards and prepaid online and mobile accounts. And also included in this list of firms and businesses are firms providing foreign exchange services and remittance firms, which allow people to send money overseas.
"This should support financial stability through greater diversity and risk-reducing payment technologies," BoE Governor Mark Carney said in a statement.
The BoE said that it is expected that the changes will enable such non-bank payments services providers (PSPs) to compete better with banks after the framework comes into practice and will come into effect in 2018 once legislative changes have been completed.
At present, payments systems such as CHAPS, owned by big banks like HSBC, Barclays, Lloyds and RBS, are negotiated by the PSPs.
The BoE said that the non-bank providers to offer a wider range of payments services would be allowed to reduce their dependence on bank competitors for access to payment systems.
In order to compete with banks, such as by accessing data of account holders, from January next year, it will also be made easier for the PSPs because of updated European Union payments rules.
Settlement accounts with the BoE's RTGS system exists for over 50 banks and building societies.
Including many drawn from the growing "fintech" or financial technology sector, there are around 450 non-bank payments services providers (PSPs) authorized by the Financial Conduct Authority.
In Britain, especially in London, fintech firms are seen as a new source of jobs and growth and in recent months, Britain is seeking to maintain its competitive edge in nurturing such fintech firms. And additionally, in order to prise open the sector to new entrants, this measure will also help set up a new payments systems regulator.
However, before it can join the payments system, a PSP will have to show it can comply with the BoE's new framework for managing risks. It will have to adequately exhibit too the BoE that all anti-money laundering checks are in place and will have to demonstrate the customer money will be safe.
(Source:www.reuters.com)
