FF Virtual Arena: Payments Infrastructure – Foundations for Faster Payments

The UK is at a formative point in payments innovation. With the introduction of ISO 20022 and the New Payments Architecture (NPA) programme, payment providers, infrastructure builders, and key financial power players are formulating what the next 30 years of Payments Infrastructure will look like.

In this Virtual Arena, we spoke to industry leaders about the possibilities brought about through NPA, namely the interoperability of future transactions and creating a more robust user experience. We also interrogated the very real challenges found in the foreseen payment systems and whether the pace the UK is travelling leaves enough room for fraud prevention.

This VA welcomes Nationwide’s Head of Payment Service Management Mark Nalder, Pay.UK’s Program Director Shane Warman, and ACI Worldwide’s Principal Consultant of Real-Time Payments Andrew Moseley.

Above anything, the panel upheld user experience and consumers as the main beneficiary of NPA. Payments are quickly becoming an everyday activity for people, some carrying out multiple transactions a day. Having the option to direct those payments in real-time aligns with the behaviours and pace consumers now have.

“The opportunity for consumers is huge… Through enrichment of data and the opportunity it brings, and the additional security around fraud. [Consumers] Having that confidence that they can pay someone immediately, and with the extra data that we have available, we’ll be able to do those additional fraud checks too” explained Nalder.

NPA envisions a new infrastructure in the UK where real-time transactions are the norm, and all financial institutions work from the same point of contact: ISO 20022. The transition from SWIFT to this new messaging service promises a UX where services can build comprehensive consumer profiles, understand how people spend their money and deliver better advice on how to spend it wisely.

To make this convergence work, payment providers and infrastructure builders must be in conversation with each other.

“There is a concern that we are all swimming in the same pool for resources. To keep the pace of change and make sure the pace is successful, we as a core infrastructure provider need to be cognizant of all that change. So, we’re trying to align the work that we’re doing with the work that’s happening at Bank of England and SWIFT because most of our end-users do not care about rails, in fact, they are rail agnostic,” said Warman.

What users do care about is safety, and the ability to make payments knowing that their transactions are secured. Real time does not necessarily mean instant, and for transactions bigger than your quick run to the shops, time and caution are essential.

“I am absolutely for moving toward innovation and fast payments being immediate, but you need to take a step back and say “for a small percentage of transactions, we’re going to take some time with this.” If I’m making payments online, or sending Shane a fiver, that’s a low risk, right? But, if I’m paying someone I’ve never paid before £20,000, as a consumer, I don’t mind if that takes a few hours. With innovation, not everything needs to be straight away, there is no harm in taking a risk approach in certain types of payments,” said Moseley.

NPA is a direct reaction to the rapidly-moving payment behaviour consumers have developed over the last decade, with the introduction of digital wallets and contactless transfers. The scaffolding for this scheme relies fundamentally on the financial leaders in the industry and their adoption of ISO 20022.

With the new messaging service, financial services providers will be able to meet the payment needs of customers and businesses, as the interoperability of transactions allows them to converse openly on one platform – better facilitating the delivery of faster payments. With the strong payments infrastructure we have in the UK, the adoption of NPA could be rigorous. Fine-tuning this scheme, and orienting transactions around risk, NPA could open up the floodgates for bigger payment innovations and become a direct competitor against cards.