The Bank, in conjunction with the Payment System Regulator and the New Payments System Operator (NPSO) – the body tasked with designing and implementing new payments architecture in the UK – opened a consultation on the plans for a new Common UK Credit Message (CCM) (65-page / 2.66MB PDF) on Wednesday.
The adoption of the CCM, which will be based on international standard ISO20022, will address current "inefficiencies" in messaging for payments processed through CHAPS, Faster Payments and Bacs, the Bank said.
"At present, CHAPS, Bacs and Faster Payments all have separate information requirements, methodologies, formats, standards and rulebooks for constructing a payment in each system," the Bank said. "This creates numerous inefficiencies, including making it difficult and expensive to move customers’ payments between the different payment systems. It also makes it challenging for new providers seeking to become participants of these payment systems, owing to the costs associated with simultaneously using many different standards."
As well as addressing those issues, it is envisaged that the new standard will better support cross border payments, help tackle fraud and provide a better overall picture of the flow of payments in the UK's economy, according to the consultation paper.
The new standard will also underpin plans to attach more detail to the information businesses and consumers obtain when making and receiving payments, it said.
"Richer data, including the purpose of the payment and parties involved, will help streamline compliance and reconciliation processes, and facilitate innovative data services to users," the consultation paper said. "And, in aggregate form, the enhanced data will help to build up a better real time picture of economic activity and financial flows across the United Kingdom, supporting policy makers, including the Bank, in taking more informed decisions."
Henry Burkitt, an expert in payments at Pinsent Masons, the law firm behind Out-Law.com, said: "The move to consult on and implement ISO20022 messaging standards for CHAPS, Faster Payments and Bacs is manifestly positive. Greater interoperability between systems will drive efficiency domestically and internationally while reducing costs and barrier to entry, and this is likely to, in turn, improve competition and customer choice. We are looking forward to the outcome of the consultation."
According to the consultation paper, more than 75% of the volume of high value payments across the world is expected to be based on ISO20022 messaging by 2023.
A "complex and multi-phase process" for adoption of ISO20022 in the UK is envisaged. The new messaging standards are not expected to apply until 2021 at the earliest. The proposals are open to consultation until 18 July.