Determining if a gateway is required for account-to-account payments is a complex riddle to solve. Payment gateways have historically been used as an entry point into the UK Faster Payments’ central infrastructure by scheme participants. These are sometimes provided as a service by Technical Aggregators or can even be developed in-house. They can simplify communications connectivity, can provide easy protocol access with message translation and apply security and encryption features as well as transaction throttling.

They have largely become accepted as an extension of the central infrastructure – a socket that participants plug into to gain access to the payment scheme rails.  But other payment rails are not dependent on gateways.  Members of the LINK ATM network can connect directly, as can participants of the P27 scheme in the Nordics. The expectation now is that Pay.UK will enable direct access to the New Payments Architecture (NPA) using modern APIs. Traditional gateways will still be available but now participants will be able to choose to go via a gateway or connect directly from their own payments technology, such as their payments hub.

Since banks have traditionally connected to Faster Payments and other payment schemes via gateways, there’s a strong possibility that they will stick to that approach for access to the NPA. A key benefit might be that they have less to change in their own architecture to achieve this. The gateway can handle message translation to enable an easier migration and potentially offer multiple schemes for wider scope of service, as well as a commitment from the supplier to implement compliance mandates. 

A direct connection however removes one party and the associated dependency from the payment chain. It saves on processing fees and provides more control to the bank over the payment flow and orchestration. The consequence is that it may enable banks more control, power and flexibility over the propositions they can offer in a competitive market and a better service to their customers.

There’s no absolute right or wrong answer to the question of whether a gateway is required. Gateways will be required, or preferred, by some participants and not by others. Providers of gateways will tell participants that they need one and other vendors may argue otherwise.

Each participant of the NPA should make a conscious decision based on analysis of the respective advantages of the different approaches, rather than because of historical industry dogma