The UK Government has unveiled its National Payments Vision (NPV) aimed at overcoming the “regulatory congestion” that the payments sector currently faces and establishing a world-class ecosystem.
This comprehensive strategy, which took a year to develop, responds to the conclusions of the 2023 Future of Payments Review. The NPV outlines the government’s aspirations for a payments ecosystem built on next-generation technology designed to foster economic growth.
Tulip Siddiq, the Economic Secretary to the Treasury, remarked, “The National Payments Vision sets out the government’s ambitions for this vital sector, aiming to achieve a trusted, world-leading payments ecosystem supported by advanced technology. This will empower consumers and businesses with diverse payment options that cater to their needs.”
To facilitate implementation, a Payments Vision Delivery Committee will be established, supplemented by an engagement group featuring representatives from various sector stakeholders.
The NPV emphasizes the need for a more predictable and proportionate regulatory framework, promoting better coordination among regulatory bodies. To support this initiative, the government has issued a joint remit letter to the FCA and PSR to streamline their responsibilities while aligning them with the goals of the Vision.
Referring to the letter, Siddiq noted that this approach will “cut through the current regulatory congestion facing the sector.” The FCA added that the announced changes will enhance coordination and clarify regulatory responsibilities, enabling collaboration with the Payment Systems Regulator, the Bank of England, and the government.
As part of this initiative, the UK is developing a New Payments Architecture programme, which will replace the existing Faster Payments and Bacs systems with a custom-built central infrastructure for clearing and settlement. The NPV acknowledges that upgrading the UK’s retail payments infrastructure has been “slow and challenging,” concluding that a more “agile and flexible” strategy is necessary. The Payments Vision Delivery Committee will play a crucial role in clarifying necessary upgrades, assessing long-term requirements, and determining appropriate funding and governance arrangements.
A spokesperson from Pay.UK commented, “The establishment of the Payments Vision Delivery Group marks a significant step towards regulatory coordination and a unified strategic direction. It is essential to define clear roles, responsibilities, and accountability for successful implementation. Pay.UK looks forward to collaborating on a modern and sustainable payments infrastructure for the UK.”
The Vision also tackles the critical issue of open banking, emphasizing its role in enabling account-to-account payments. Consequently, the regulatory oversight for Open Banking will transition to the FCA, which will act as the UK’s regulator to promote faster progress on sustainable commercial models and consumer protections.
Furthermore, the PSR has pledged to conduct an independent review of the authorized push payment fraud reimbursement rules after 12 months, while the government recognizes the contributions of the technology and telecommunications sectors in combating APP fraud.
On the topic of a retail central bank digital currency (CBDC), the government is committed to exploring the potential of a digital pound, although it stresses that any rollout will require primary legislation.
Tony Craddock, Director General of The Payments Association, welcomed the NPV, stating, “This is exactly what we need to support growth in the UK—clear direction that respects the need for change while reflecting on our strengths and weaknesses. It is designed for an industry that is ready for growth and is centered around the goal of achieving a trusted, world-leading payments ecosystem.”
Mark Brant, Chief Payments Officer at NatWest, expressed a positive outlook on the government’s actions, highlighting that they will unlock growth in the UK economy and ensure that the nation remains a global leader in payments. He emphasized the importance of realizing the growth potential of digital banking and the need for a resilient regulatory framework to support innovation, security, and competition in the industry.