Pay.UK Slashes Barriers for Non-Bank PSPs with New Flexible Faster Payments Liquidity Model

Quick Summary

Pay.UK has launched a flexible liquidity model for Faster Payments, allowing participants to set their own Net Sender Caps. This move reduces pre-funding requirements at the Bank of England, specifically helping non-bank payment providers lower operational costs and improve capital efficiency within the UK ecosystem.

How does the flexible liquidity model benefit non-bank PSPs?

The new framework directly tackles the high cost of entry for non-traditional payment service providers. By moving away from rigid, prescribed Minimum Net Sender Caps (MNSC), Pay.UK allows firms to optimise capital allocation based on their actual transaction volumes rather than theoretical peaks. Key benefits include:

• Reduced pre-funding: Firms no longer need to lock up excessive capital in Bank of England accounts.
• Improved financial agility: Participants can propose limits that reflect their specific risk profiles and payment flows.
• Operational flexibility: The model allows for adjustments during non-peak periods, enhancing real-time gross settlement (RTGS) management.

What results has Pay.UK delivered for payment system access?

Since 2018, Pay.UK has focused on democratising UK payments. This latest update to the flexible liquidity model is a continuation of a strategy that has already seen direct participation in Faster Payments grow from 26 to 47 organisations. By implementing controls similar to the Bacs Debit Cap, Pay.UK ensures that market stability is maintained even as barriers to entry fall. The model is optional, meaning established players can maintain current settings while innovative fintech firms can adopt the more efficient, participant-defined caps immediately to scale their operations.

How does this update maintain UK payment system resilience?

Despite the shift toward flexibility, systemic security remains paramount. Pay.UK maintains a centrally governed framework that includes quarterly plan reviews and real-time monitoring. The flexible liquidity model ensures that while liquidity is freed up for growth, settlement protections remain robust. As David Morris, COO at Pay.UK, noted: "This is an important step forward in making Faster Payments more accessible, and flexible. It gives participants greater control over their liquidity by lowering barriers to entry without compromising the robust controls that underpin confidence in the system."

FF NEWS TAKE:

This is a significant win for the UK fintech sector. By addressing the flexible liquidity model, Pay.UK is removing a silent killer of fintech margins: idle capital. Forcing non-banks to mirror the liquidity buffers of Tier-1 banks was always an archaic friction point. This change "moves the needle" by effectively lowering the cost of doing business in the UK, likely triggering a new wave of direct participation from agile, non-bank challengers.