Scottish FinTech Modulr to work directly with Bank of England
Payments as a Service API platform for digital businesses Modulr has announced that it has become a direct participant in the Faster Payment Service (FPS).
The Edinburgh firm is one of a few ‘non-banks’ that will become a direct participant in the service.
The new access will enable Modulr to pioneer greater payments innovations and improve service offering to clients through direct access to the UK payment systems.
The Payments as a Service API platform has announced that it has become a direct participant the Bank of England’s financial market infrastructure, Faster Payment Service (FPS).
The Edinburgh-based firm has become one of a small number of non-bank payment service providers to hold an account in the Bank of England’s Real-Time Gross Settlement (RTGS) system, allowing the FinTech to settle payment obligations in central bank money under its Modulr FS Limited entity.
This follows an assessment by the Financial Conduct Authority (FCA).
This has been achieved under a new settlement account policy directive initiated by the BoE that enables direct access to payment systems through provision of settlement accounts to non-bank PSPs.
Modulr will now process payments without going through a commercial bank, a move designed to provide greater clarity on the location and protection of the funds.
In addition, it will technically connect directly to the payment schemes removing the operational reliance on third-party bank systems. Following an initial live proving period, Modulr will migrate its existing sort codes, accounts and transaction volume to the direct access solution.
Modulr CEO Myles Stephenson said: “This is a significant milestone for Modulr enabling greater control over our payments infrastructure allowing us to drive further innovation faster.
“Coupled with the £10m awarded to us from the RBS Alternative Remedies Package, it allows us to compete with banks, and bring greater value to our clients. This capability will support our rapidly scaling organisation as we migrate volume in the coming months; in October alone, we processed over £1.3bn of Faster Payments value.”
Paul Horlock is CEO at Pay.UK, operator of the UK’S Payment Networks including Faster Payments.
“We are pleased to welcome Modulr on board to provide real-time payments on a level playing field with the best-known banks on the UK high-street,” said Horlock .
“This is possible because Modulr is now using its own settlement account with the Bank of England, rather than making payments through a commercial bank.”
The news follows the announcement that the firm will invest £20m in Scottish FinTech.