Pay.UK has published its procurement prospectus for a much-hyped “new payments architecture” to take over from Bacs and Faster Payments. What does it reveal?
It really is the mother of all contracts.
The winner will watched like a hawk by three watchdogs: the Bank of England, the Payment Systems Regulator, and the NCSC.
They will be responsible for tearing up and rebuilding the UK’s £6.7 trillion payments infrastructure almost from scratch.
Their “New Payments Architecture” (NPA) will underpin the entire country’s retail finance sector: wave goodbye to BACS, Cheques and Faster Payments.
The enterprise or consortium that wins the job will need to replace payment systems that are critical parts of the UK’s national infrastructure and deliver a “seamless migration of current service users”.
At stake: billions of pounds weekly and arguably, the UK’s economy.
No pressure then.
They will need to put in place new hardware, new software, a secure telecommunications network and operating environments.
This will start with a clearing and settlement layer capable of clearing and settling existing real-time as well as bulk payments.
Migration of these existing payment capabilities onto the new platform will need to happen on a phased basis, with the real-time capability being migrated first.
If it goes wrong, everyone will be affected.
For vendors with a risk appetite, it’s what the organisation running procurement, Pay.uk, describes as a “commercially attractive” opportunity.
But how far off is it?
NPA: The Procurement Prospectus Lands
Pay.uk (the organisation previously known as the New Payment Systems Operator) took over responsibility for Bacs payments and Faster Payments systems in May 2018.
Late last week it published its long-awaited New Payments Architecture Procurement Prospectus.
As Pay.UK’s CEO Paul Horlock put it: “We are seeking a long-term strategic partner capable of working with us to safely deliver a scalable infrastructure that can process trillions of pounds worth of payments every year.”
This model for payments in the UK will take over the processing of Bacs, Faster Payments and, potentially, cheque payments.
“Bringing them together will catalyse innovation – meaning the potential for better payment services for everyone – by simplifying the rules, standards and processes that banks and others need to follow to use the systems”, Pay.uk said.
“The NPA will… enable simpler access, ongoing stability and resilience, promoting greater innovation and competition, increased adaptability and better security.”
The What: A Replacement for Bacs Payments, Faster Payments, Cheque Clearing…
The NPA needs to be all of the things you would expect: scalable, stable, resilient, agile and compliant with ISO 20022 messaging expectations, Pay.uk said.
The “commercially attractive” opportunity will require an “experienced partner that has a track record of delivery.”
Pay.UK adds: “This partner can be a single supplier, or a prime-led consortium, which can demonstrate it has the skills, values and vision to design, build, run and maintain a scalable and evolving world-class infrastructure for Pay.uk”.
This aside, Pay.uk offers no detail on the infrastructure needed.
That will be up to the vendor.
The When: How Does 2027 Sound?
So when is this actually going to happen?
As Computer Business Review recently reported, the procurement scope for NPA has been promised for some time, but been changing shape behind the scenes.
It began in 2017 with a procurement process by Faster Payments itself.
This was followed this with a Request for Expressions of Interest and that, in turn, with a Request for Information.
After Faster Payments was rolled into the NPSO (now Pay.UK) that process was aborted and, as last week’s procurement prospectus makes clear, it’s going to take a while longer yet until someone signs on the dotted line and starts taking old mainframes to the tip.
What Happens Now?
A brand new “Pre-Qualification Questionnaire (PQQ)” will now be issued in November, Pay.UK promises. This will winnow out those applications without the “experience and credentials of running mission critical national infrastructure”.
In Q1 2019, bidders qualifying post-PQQ will then proceed to a Request for Information Stage: this must include ideas on “how the challenges faced by Pay.UK can be addressed” along with details on solution design and operating model.
An Request for Proposal (RFP) will follow in Q3 and a Best and Final Offer (BAFO) at the very tail end of 2019, Pay.uk promises.
The successful bidder is “likely to be announced in Q2 2020”, Pay.UK said.
As Bob Lyddon, Director, Lyddon Consulting, told Computer Business Review: “That is a nice lot of paperwork for the vendors to compile (if they can get internal funding to do it, given that many will have strained their own credibility by making the case to participate in the process that has now been aborted).”
He added: “The procurement exercise is to select a strategic partner with whom to develop NPA: it is not a procurement of NPA.”
“The wording used by Pay.uk leaves open the possibility of a further definition phase after the selection of the partner, for the partner and Pay.uk to define what they want and to then contract on it. Should a definition phase be required after the partner selection, we can add another year onto the start of migration.”
An ambitious and amorphous New Payments Architecture, could still be close to a decade away, when building, testing and migration are taken into account.
It also needs to wait until the Bank of England’s Real-Time Gross Settlement (RTGS) renewal programme has happened.
Meanwhile, consumers will have to make do with their existing and increasingly strained infrastructure.
The builders, in short, may need to be called in before the architects.