From roadmap to reality, unpacking the UK’s National Payments Vision

A UK national payments vision has been long in the making. Since the (now abolished) Payments Council set out its initial National Payments Roadmap back in 2013, regulators, policymakers and industry have pushed for progress on making the UK a global leader in payments. Since then, a series of developments – including the establishment of the Payment Systems Regulator (PSR), the Payment Strategy Forum and latterly the Garner Future of Payments Review – have marked the slow march towards a clear, north star direction for the UK payments ecosystem.

The recently released National Payments Vision policy paper therefore marks a landmark move, setting out the new Labour Government’s ambition for the sector and pegging progress to its number one mission: economic growth.

Whilst this is welcome progress for policy makers and industry alike, the Vision sets out a number of further developments needed to fully drive momentum and swift progress on key actions – from regulatory reform to cross-sector collaboration – is needed to head off any risk that the UK falls behind international competition.

This long read sets out the ambitions of the Vision, the key reforms it proposes to take forward, and what these mean for the sector as the next phase of work to make the UK a global leader in payments commences.

Labour’s National Payments Vision: what it sets out to achieve

The Labour Government has been clear – both pre-and-post election – that the UK’s financial services sector has a significant role to play in achieving its mission with a particular focus on how, as a sector, it can support growth, innovation and global competitiveness. The party has set out an ambitious plan for this “crown jewel” sector which, at its heart, is underpinned by a drive towards a less burdensome regulatory landscape and firm evidence of consumer outcomes.

Taken alongside the Garner Review commissioned by the previous government in 2023, which identified lack of investment, burdensome regulation and pace of development as barriers to unlock, the National Payments Vision therefore contains few surprises.

Broadly, the Government’s Vision ambitions can be distilled into four key areas:

1. 1. A clear regulatory framework for the payments sector: In line with calls from industry that the regulatory burden on payments firms needs to be addressed and modernised – and the Labour Government’s own commitment to revisit the regulatory landscape in their Financing Growth manifesto last year – the Vision advocates for a regulatory environment that is clear, predictable, proportionate and, critically, coordinated across the multitude of regulators overseeing the sector.
   2. Building a resilient and innovative infrastructure: Recognising the need for significant investment in the UK’s retail payments infrastructure, and with one eye on how to embed emerging payments methodologies such as Account to Account in the UK ecosystem, the Vision calls for an agile and flexible approach to upgrades to the Faster Payments System.
   3. Increasing competition and innovation: Key to the Vision is an ambition to expand and diversify the UK’s payments ecosystem, with consumer and business choice front and centre in the aim to drive innovation and increase competition in the market, both domestically and globally. To drive competition, the Vision emphasises the need for the UK to be a global leader in payments innovation, rooted in clear regulatory parameters, benefit to all users and reflective of increasingly diverse consumer and business needs.
   4. Putting consumer protection front and centre: Reflecting the Labour Government’s inherent interest in consumer protection, the Vision highlights the critical importance of both payments system integrity and protections for users. This is particularly key for cross-border payments and international regulatory operability, where the Government is keen to walk the line on global leadership without compromising consumer protection or financial stability

Key regulatory and policy changes being proposed

To support this ambitious vision, it sets out a series of proposed reforms and key next steps which will dominate the Government’s work in this area for the next few years.

Regulatory frameworks and oversight

• Enhanced coordination between the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) to avoid regulatory overlap and streamline processes, building on the Memorandum of Understanding framework already in place.
• The FCA is designated as the sole regulator for Open Banking, streamlining oversight and fostering innovation in account-to-account payments, with the Joint Regulatory Oversight Committee (JROC) to be wound down at the earliest opportunity.
• The FCA and the PSR are tasked with improving coordination to address regulatory congestion, ensuring a more cohesive approach to payments regulation.

Infrastructure upgrades

Comprehensive upgrades to the UK’s Faster Payments System (FPS) to improve resilience, functionality, and scalability.

• Emphasis on integrating distributed ledger technologies (DLT) and ISO 20022 messaging standards for better interoperability and efficiency.
• Establishment of a new Payments Vision Delivery Committee to oversee infrastructure modernization and evaluate long-term infrastructure needs. The Committee will work with the Bank of England (BoE) and the PSR to:
• • • clarify upgrades to FPS and assess longer-term requirements
    • consider appropriate funding and governance arrangements needed to deliver this (including proposals to reform Pay.UK)

Innovation & competition

• Encouraging innovation within a clear regulatory framework to ensure new payment solutions cater to diverse consumer and business needs.
• Adoption of digital ID framework being introduced under the Data (use and access) Bill across the financial services sector once established.
• The development of seamless account-to-account payment methods, providing consumers and businesses with more choices and fostering competition among payment service providers
• Continuation of the BoE work to establish a Central Band Digital Currency, with primary legislation promised at the point of establishment.
• Policies to facilitate the adoption of cutting-edge technologies, such as programmable payments and real-time settlements.
• Incentivising private investment in payment services to maintain a competitive and dynamic ecosystem.

Strengthened consumer protection

• Measures to enhance fraud prevention, including improved data sharing among financial institutions and the implementation of robust consumer protection standards.
• Measures to improve cross-border payments without compromising financial stability or user protections.
• Revocation of the payments authentication regulations relating to SCA in the Payment Services Regulations 2017, with the FCA responsible for incorporating successful implementation of Strong Customer Authentication (SCA) requirements in to the Handbook.
• Further collaboration between the technology and communications sector and the financial services sector on addressing fraud upstream.

What comes next? 

Key to the National Payments Vision is the establishment of a new Payments Vision Delivery Committee which will sit at the heart of future work on this issue.

Made up of representatives from HM Treasury, the FCA, PSR and BoE, the Committee will oversee implementation of the Vision and act as the central point of engagement for industry, with three core objectives:

1. Regulatory Alignment: Ensure that regulatory activities from the key regulators – the FCA, PSR and BoE – align with the objectives and ambitions of the National Payments Vision.
2. Coordination: Facilitate coordination among the BoE, the FCA, and the PSR to manage the overall regulatory burden and promote innovation.
3. Prioritisation: Prove a steer on prioritising initiatives across the payments landscape.

To build on this, the new Committee will establish a Vision Engagement Group to inform and support its work. Membership of this engagement group will be hard fought within the sector and the application process is not yet clear.

What does this all mean for the sector?

Within all the rhetoric, one thing is clear. The publication of the National Payments Vision represents an attempt by an incoming government to capitalise on a fast-moving and high potential sector of the market, and its clear ambition to be “a trusted, world leading payments ecosystem delivered on next generation technology, where consumers and businesses have a choice of payment methods to meet their needs”.

However, whilst it marks the conclusion of the latest round of consultation and industry input into what the UK can achieve in this space and what needs to be reformed, it also marks the start of a series of working groups, committees and further consultations which will shape the long-term policy and regulatory landscape for businesses in the payments sector.

There is much work left to do – from streamlining the regulatory rule book to shifting responsibility for key areas between the regulators themselves – and there are a number of areas to watch:

• Key to the development of the National Payments Vision to date has been the extensive consultation with industry. The newly established Vision Engagement Group will be a central means for continuing this, but there is limited clarity on scale or membership at this stage. Involvement in the group will be hard-fought and firms should continue to seek other ways to engage and inform policy makers, on top of their regulatory engagement.
• This Vision has drawn on significant input to reach its conclusions and represents several years of work. However, beyond the key bodies awarded responsibility for delivery there is still a knowledge gap amongst MPs and consumers over the potential of the sector and what it can deliver. Both groups will be fundamental advocates for pace of progress and any future reforms needed and making this complicated sector simpler will be key to communicating to them.
• Lastly, progress on some of the ambitions set out here has been slow in the making – not least on Open Banking and the establishment of a digital pound. Proof of the Government’s commitment to this Vision and the potential it aims to unlock will be evidenced by action – something firms will be eagerly looking for as a new year commences and the legislative timetable starts to take shape.

What are your views on the National Payment Vision and what it means for the next phase of payments in the UK?

Get in touch with the WA Communications Financial and Professional Services team to discuss.

Tom Frackowiak, Senior Partner – tomfrackowiak@wacomms.co.uk

Natasha Egan-Sjodin, Senior Director – natashaegan-sjodin@wacomms.co.uk

Terri Garratt, Account Director – terrigarratt@Wacomms.co.uk