How U.K. Fintech Firms Can Access Faster Payments
Fintech providers in the U.K. hoping to access the country’s Faster Payment Scheme should consider outsourcing, according to a new white paper from Raphaels Bank.
Thanks to regulation, including rules designed to reduce financial fraud, those fintech providers are “facing significant challenges in being able to deliver innovative payment services in the U.K.,” the bank said. “Against this is the major barrier that direct access (to faster payments) is only an option for entities with banking licenses.”
That leads Raphaels to encourage what it calls a “direct agency” model for access to the Faster Payments Scheme. In general, that means “combining direct technical connectivity between a payment service provider and the Faster Payment Scheme (potentially facilitated by one of the new aggregators) with outsourced settlement provided by a bank eligible for direct access (such as Raphaels). In this model, the integrity of the payment systems is safeguarded as settlement is carried out by an entity with a banking license.”
That means that fintech providers would not have to wait for the Bank of England to change its account settlement policies, the Raphaels notes. Those providers can “outsource the settlement, while also controlling their own technology environment,” said Mike Smith, the bank’s commercial director.
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