Likewise, all it takes is one PSP to successfully gain institutions have the capital liquidity to pay out, in direct access to the Faster Payments system and it order to maintain the financial stability of the nation. will be possible to define the standard for all others that follow. A number of larger players, including Proposed solution: With such responsibility, APS, would be willing to act as the ‘test bed’ for the it is therefore crucial that the BoE takes an equally future of the payments industry. rigorous approach to non-banks. However, as smaller payments players do not have the capital 3. Access to Bank of England (BoE) of the larger players, a different approach to protect settlement accounts ‘the system’ is required to avoid ruling them out altogether. Aside from the fears of traditional banks, the main hurdle to gaining direct access for alternative Rather than demanding “banking” status or even players is that access to Faster Payments requires a large amount of collateral/capital at all times, the a settlement account through the BoE – a service BoE could impose a condition, whereby non-banks which is denied to non-banks. With responsibility are required to pre-fund their settlement account for the nation’s economic health in its hands, it is to an amount that supports a member’s outward understandable that the BoE exercises caution payments. In fact, Faster Payments already supports when granting access to settlement accounts. As this type of model and it would greatly benefit the such, any solution needs to mitigate the risk from ecosystem if there was an opportunity to leverage non-banks, without simply ruling them out altogether. this similar process within the BoE. Ironically, the Regulators (primarily the PRA and the FCA) have 100% collateral EMIs are already required to hold on created significant capital requirements on banks in all customer funds, along with this potential prefund order to operate as a bank. The BoE leverages this model for settlement accounts at the BoE, would strong governance as the main criteria for granting result in PSPs having less systemic risk (at least a settlement account. This level of risk mitigation financial risk) than the current model that banks is a justified requirement. In the event of a ‘run on create for the BoE to oversee. the banks’, the BoE needs to ensure that these 8 | Payment infrastructure: a call for fair and equal access for FinTech