New era for access to Faster Payments as first non-bank PSP activates direct connection

  • TransferWise becomes Faster Payments’ first Directly Connected non-bank PSP
  • Milestone represents culmination of Faster Payments’ Access programme

Faster Payments has today (Wednesday 18 April 2018) welcomed TransferWise as the first ever non-bank payment service provider (PSP) to directly connect and settle with its 24/7 real-time payment infrastructure, opening the possibility for a whole new generation of innovative Payment Service Providers (PSPs) to offer payment services on an even footing with the biggest names in banking.

TransferWise is a new kind of financial company for people and businesses that travel, live and work internationally. As a ‘non-bank’, they would previously have had to rely on a commercial bank that held a settlement account at the Bank of England to effect settlement on their behalf and connect to Faster Payments infrastructure. Now, due to changes made by the Bank of England to open up RTGS settlement accounts to non-bank payment service providers in 2017, they can do so directly to offer a truly bespoke real-time payment proposition to their customers.

TransferWise is the first of many non-bank PSPs expected to make use of the new provision, which contributes to financial stability by dividing the financial exposure of providing payment services between a greater number of institutions.

The milestone represents the culmination of Faster Payments’ Access programme, which set out in 2014 with a mission to level the playing field for every firm that wants to offer true real-time payments to their customers. The programme has only been possible thanks to extensive collaboration with the Bank of England, FCA and HM Treasury to deliver a host of technical, policy and statutory changes to open-up real-time 24/7 access to new players and markets.

The resultant New Access Model redefined the standards and processes for payment service providers, catalysing a market amongst technology vendors and leading to an increase in direct participation to Faster Payments over the past four years from 10 institutions to 22, with more still in the pipeline.

Craig Tillotson, Chief Executive of Faster Payments, said:

“Now, for the first time, a non-bank payment service provider is able to provide real-time payments on a level playing field with the best known banks on the UK high-street, using its own settlement account with the Bank of England, rather than requiring arrangements with a commercial bank.

“This milestone represents the culmination of years’ of hard work by Faster Payments, the Bank of England, the FCA and HM Treasury in making the technical, policy and statutory changes needed to enable direct access to real-time payments to new institutions and markets.

“It will also substantially increase the stability of the UK financial system, by breaking the critical link in financial exposure between innovative Payment Service Providers like TransferWise and the commercial banks they previously had to use to deliver payment services.

“A more competitive, innovative and safer future - where even non-bank PSPs have the freedom to offer truly independent, tailored payment propositions - is within our grasp.”

Kristo Käärmann, CEO and co-founder, TransferWise, said:

"Today is game changing for TransferWise and millions of our customers around the world. The Bank of England is giving tech companies the same rights to process payments as the retail banks - enabling us to cut out the middlemen and offer people a faster, cheaper service. I truly believe that money should move around the world as quickly and as cheaply as email, and this is a vital step on that journey.  

"The Bank of England is world leading and other central banks should be looking to follow the UK’s example. Offering non-bank payment service providers direct access to settlement services enables more innovation, more competition, and should in the long term reduce systemic risk. Consumers stand to benefit significantly if this trend is magnified on a global scale."