Is the UK going to turn its Faster Payments Service (FPS) over to an Indian company? Sky News is reporting that Tata Consultancy Services (TCS), an arm of the giant conglomerate Tata, is a leading contender to become the administrator of the service.
FPS is responsible for processing more than 90% of salaries, over 70% of household bills, and almost all state benefit payments. The current administrator is Vocalink, a British payments processor that has been owned by Mastercard since 2017. Vocalink also operates Canada’s real-time payments system, Payments Canada.
FPS was established in 2008 to supplement Britain’s BACS (for Bankers Automated Clearing Services) system. It cuts the time to settle transactions from days to as little as 80 seconds.
But the system has come under fire more recently for lagging behind more state-of-the-art payments processing. In November 2023, a report called Future of Payments Review charged that FPS has become clunky and was in need of updating. The report said that the FPS system was now slower than its foreign rivals, many of which can settle transactions in 30 seconds or less. The author called on the payments industry to embrace open banking technology that could offer an alternative to industry giants Mastercard and Visa, which process the majority of payments in Britain.
All Eyes on Tata
One concern about handling over control to Tata is recent scrutiny faced by another part of the conglomerate. Tata Steel is planning to cut 3,000 jobs in Wales as a result of switching to more eco-friendly furnaces. That decision has engendered much controversy because the switch was partly funded by a £500 million government grant.
In recent weeks, Tata Consultancy Services has announced that it would be focusing its growth more on areas outside of North America. “I wouldn’t say we are consciously reducing our North America exposure, but we are consciously increasing our play in other geographies because we want to work more in markets like Latin America, Southern Europe or Japan,” TCS CEO K. Krithivasan told Reuters in January.
According to Sky News, the FPS appointment is on hold until the UK government publishes Vision for Payments, a new strategy statement for the sector.