The UK’s high-street banks are to roll out a long-awaited
internet protocol-based payments network, developed by clearing
house Bacs.From October, banks - including Barclays, HSBC
and Royal Bank of Scotland - are expected to begin using the new
network for connecting customer payments to the Bacs clearing
system following the completion of trials.
Benefits to customers will include faster
payment confirmation and the ability to track the progress of
payments online, rather than having to wait for receipts for
confirmation.
The launch of the IP network, which is due to
be in place by 2005, will mark a major milestone in Bacs’ £75m
technology overhaul. The investment is designed to help Bacs meet
growing demand for electronic payments and compete in an
increasingly competitive European market.
The network will replace Bacs' private
telecoms link, which is used by more than 40,000 companies for
sending salary payments and other financial information to the
clearing house.
The IP network will be supported by smart card
and Public Key Infrastructure (PKI) technology. Various suppliers,
including Albany Software, now offer customers payment software
compliant with the new IP network.
In 2001, Computer Weekly revealed that the
multibillion-pound clearing network was vulnerable to hacking
attacks because the Bacs board had failed to implement
recommendations from its IT department to introduce a PKI security
system and services. Bacs denied that the network was vulnerable
and insisted that its security was first class.
The new IP network will allow companies to
receive electronic conformation that a payment has been received by
Bacs rather than by post, as occurs under the existing system.
Bacs is also committed to restructuring its IT
department. A "new ventures group" will develop technology, while a
standards arm will govern the £3.7bn worth of direct debit and
direct credit transactions processed by the clearing house each
year.
IT staff in the new ventures group will scan
the payments market for opportunities and partner with software
suppliers to develop services for banks
The bulk of Bacs' 200 IT staff will continue
to support the clearing house's IT operations and the technology
overhaul.