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October 1, 2018updated 02 Oct 2018 7:40am

New Payments Architecture: Kicking a £6 Trillion Can?

"The NPA is amorphous and huge"

By CBR Staff Writer

Vendors seeking to tender for a sweeping overhaul of the UK’s multi-trillion payments infrastructure are being kept on tenterhooks – with a process initially meant to have started late last year now delayed until mid-October.

The winner will support the clearing and settlement of potentially all of the UK’s non-card retail payments – a £6 trillion-plus operation – in what has been described by the Financial Conduct Authority as “a generational change in UK payments”.

Yet critics have warned the delays point to significant issues in designing the planned “New Payments Architecture” and that vendors are losing patience.

New Payments Architecture: Who’s Procuring?

The entity procuring the system is the New Payment System Operator (NPSO), which this year took over responsibility for the UK’s retail payment systems. The NPSO is a limited company set up in July 2017 and overseen by the Bank of England.

NPSO, new payments architectureAt the heart of its plans is a vision for a so-called New Payments Architecture (NPA), which the NPSO describes as a “a new conceptual model for payments in the UK”.

See also: Faster Payments Outage: Cause Still Unknown; 8,000 Still Chasing Transactions

The New Payments Architecture will underpin the processing of more than £6.7 trillion of Bacs, Faster Payments and cheque payments every year and integrate a wide range of APIs as a hub for a more integrated payments system, following a push by regulators for a more resilience and flexible system.

Initial proposals had been for an August 2017 tender to secure a long-term strategic partner, then announce a winner in Q3 2018, for NPA delivery in 2021.

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But… Where is the New Payments Architecture?

But in a statement shared last week, the NPSO admitted procurement had been delayed by a year, saying it had broadened the scope of the procurement and would be announcing more details on October 17, 2018.

NPSO CEO Paul Horlock said: “The New Payments Architecture project represents a massive opportunity for suppliers to be involved in delivering the future of payments in the UK. We need a long-term strategic partner that is capable of working with us to safely deliver a scalable infrastructure which can process trillions of pounds worth of payments every year. We look forward to engaging widely to find the right one.”

The new procurement exercise comes after the Faster Payments and Bacs schemes were brought under the NPSO’s remit, allowing procurement for the successor to each of these schemes to be integrated inside the NPA programme.

The NPSO said: “This has widened and enhanced the scope of requirements to include clearing and settlement of potentially all of the UK’s non-card retail payments, rather than just the real-time aspect.”

new payments architecture

The current Faster Payments system

“Back of a Fag Packet”

Bob Lyddon, who runs banking specialist consultancy Lyddon Consulting, told Computer Business Review: “The NPA is amorphous and huge. All sorts of things have been promised but the NPSO is only just realising how big it is; this is not a matter of a few IT changes in the back office. After having made such a fuss, the NPSO has now succeeded in hacking more than a few vendors off.

He added: “It looks a bit like it’s all being done on the back of a fag packet, albeit a big one. It’s a system that has to have APIs to Bacs, to cheques clearing, to all sorts of overlay services. It has to be ISO 20022 compliant and is on a scale that has never really been done before; even having it ready for 2024/2025 would be a challenge, if possible.”

Vocalink’s system relies on two primary London data centres, according to a 2013 case study.

The plan is for Faster Payments to be migrated to the new system first, followed by a consultation in 2019 on the possibility of Bacs and possibly cheques clearing, if a business case can be made.

Mastercard company Vocalink is currently responsible for Faster Payments.

The company offers few details on the infrastructure that underpins it and had not responded to a request for comment as Computer Business Review went to press.

What’s Faster Payments Currently Built On?

A 2013 Oracle case study however gives some insight into how Faster Payments currently operates (with the caveat that elements of it may be out of date).

Oracle describes its system as: “Deployed on Oracle Database running on Oracle Exadata Database Machine and the Oracle Maximum Availability Architecture (MAA)”

The electronic payment system architecture overview, at a high level comprises at the client tier: a proxy using Apache, MQ, and FTP; at the application tier: Weblogic and MQ and at the database tier: Oracle Database 11g.

new payments architecture, faster payments


VocaLink currently performs full backups on a nightly basis using Oracle Recovery Manager (RMAN), the 2013 report suggests, which are performed at both the primary and the standby sites. “In the event of an extended outage, VocaLink will use an RMAN incremental backup in place of Data Guard’s automated solution to more quickly resynchronize a standby database if it has fallen far behind the primary.”

The NPSO will publish “specific details regarding the approach and timelines for the new procurement process” in a prospectus on Thursday 18 October.


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