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LINK tender represents latest step in the upgrade of UK payments infrastructure, say experts

Businesses have been invited to apply to provide switching and settlement services for a network of cash machines in the UK.29 Jan 2018

The decision by Link Scheme Holdings (LSH) to open a competitive tender for the contract is the latest step in the modernisation of the UK's payments architecture, said banking and payments experts Tony Anderson and Henry Burkitt of Pinsent Masons, the law firm behind LSH is the company behind a network of more than 70,000 ATMs in the UK.

The eventual winner of the contract for the work for the LINK payments scheme, which is expected to last between five and 10 years, will have to come through a procurement process comprised of multiple stages. Businesses are first encouraged to submit an expression of interest by 2 March. Some of the businesses will then participate in a 'request for proposal' stage and then invited to submit a full proposal and presentation to the LSH.

Further shortlisting and negotiating will then take place before a final decision on who to award the contract to is due to be taken in the first three months of 2019, LSH said.

"During the competitive procurement process bidders will be required to demonstrate a commitment to innovation and a highly resilient, real time 24x7 transaction processing that can meet the current and future needs of all LINK network members," LSH said.

The announcement of LSH's procurement follows on from a similar announcement by the company behind another UK payments scheme in December last year when a re-tendering exercise was opened for the upgrading of the underlying infrastructure for the Faster Payments scheme. The initiatives are "an opportunity to drive innovation in the technology that underlies payment systems", Burkitt said.

"It will be interesting to see the parties that put themselves forward to tender and if anyone can challenge Vocalink as the supplier of payments infrastructure," Burkitt said. "The chosen provider for both LINK and Faster Payments back end is likely to also be a valid bidder to provide the new payment architecture (NPA) which the New Payment Systems Operator is committed to implementing in relation to Faster Payments and Bacs by 2021. These new systems may well be an indicator of how the NPA will eventually operate."

Anderson said the LINK tender process also needs to be considered in light of the recent announcements that the current estate of LINK ATM’s numbering 70,000 could be reduced significantly.

"Any drive towards innovation must ensure that those most reliant on ATM’s who are often vulnerable and/or located in remote areas, continue to have access to the payment systems and don’t join the ranks of the ‘great unbanked’," Anderson said.