An NPA-driven approach in the fintech space has emerged as an effective alternative payment option in the UK region.
FREMONT, CA: The new payment architecture (NPA) of the UK—reinforcing digital retail payments—has gained monumental significance in recent times and is anticipated to soar critically with no signs of a slowdown in the future. Innovation frontiers in the payment space are favouring various critical schemes and payment systems in real-time all around the globe. This, in turn, is highlighting the challenges and opportunities in the payment domain, where business leaders are reconsidering the key considerations for banks and, thereby, staying on track with NPA transformation.
Installing an NPA approach in the fintech sector aids in streamlining interbank payments into a mere cleaning and settlement system while replacing the numerous systems that are currently in place or have been pre-established. Hence, faster payment transactions will mitigate the NPA in the future and will likely be followed by the banked automated cleaning system (BACS), emerging as a new central infrastructure. As a result, it will enable the biggest shift in payment processing for a generation. Faster payments in the fintech arena are yet to be mitigated, whereas banks, on the other hand, are urged to prepare for the first phase of the transformation, like self-certification.
One such transformation that the payment space is all set to adopt is facing up to the potential challenges that may arise in the fintech space. For instance, banks, generally, face a head-on challenge in adapting their systems to harness NPA’s ISO 20022 message standard, especially for faster payment transactions. Meanwhile, ISO 20022 is a critical XML-format message and thus encompasses various information within it. It is more flexible than the current standard; thus, banks ought to ensure the supporting capability of their systems that inbound ISO 20022 messages and translate them for internal processing effectively.
Similarly, introducing faster payments in the previous decade served as a critical illustration of the possible decisions that could be made. For instance, BACS, the incumbent system since the past annual periods, encompasses an 18-character limit in the reference field generally. Following this, bank statements and online banking logs deploy references of nearly 18 characters and even fewer accordingly.
Opting for faster payments has allowed for extended reference field transactions in the fintech arena, where banks, on an increased scale, are yet to transform their front-end systems to facilitate efficient accommodation. Meanwhile, patterns like ISO 20022 facilitate messages with more information, like extended references and documents in the arena like invoices and bills. It assists banks in revisiting the end-to-end process as a whole per the carry-out of the reference fields through internal systems.
