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Bacs revamp set to boost Web payments industry

Nick Huber
Bacs, the UK banks' clearing house, is considering a radical restructuring that could drag payment services into the Internet age.

The secret restructuring proposals - the most radical in the company's 33-year history - could allow non-bank members to become shareholders in Bacs, throwing open the elite financial club.

Payment clearing association Apacs could take over the running of the direct debit scheme, under one proposal being considered.

The shake-up - discussed by Bacs directors and the high street banks - would open the gateway for a host of IT suppliers to develop Web-based payment services in partnership with UK banks, analysts claim.

UK banks have come under fire from the government and analysts for failing to offer businesses real-time payment services over the Internet. A revitalised Bacs - with greater investment and a wider skills base - could develop technology to reduce the time taken to clear cheques, analysts believe. Bacs could also provide trusted third-party services to guarantee real-time payments over the Web.

"[A restructuring] could open up Bacs to new shareholders such as IBM and BT," said one industry source. "It would help to get new blood in and Bacs would be freer to do commercial services."

Bacs is owned by its members, the leading banks and building societies. Half of the British population uses Bacs for direct debit payments, while 40,000 businesses use the clearing house for payments, including salary payrolls.

Under the restructuring plans Bacs would remain a limited company and its IT staff would continue to be responsible for the daily operations and the processing of transactions.

Analysts said a restructured Bacs would be good for business. Duncan Brown, consulting director at Ovum, said, "[The restructuring] is looking at improved service and efficiency over the whole inter-banking system."

Bacs would be well placed to become a trusted third party to guarantee financial transactions online, he said.

Earlier this year Computer Weekly revealed the Bacs board had failed to act on more than five years of detailed recommendations from its IT department to introduce a public key infrastructure (PKI) security service.

In a statement to Computer Weekly, Bacs admitted it was reviewing its structure. and examining its governance "to identify the most appropriate direction for the future" but said that no decision had been taken.

The review is being co-ordinated by Apacs. Bacs also said its security framework operated to a high standard and was subject to regular reviews.

Apacs would not comment.

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