The UK Payments Forward Plan 2026 to 2028: What You Need To Know
A comprehensive three year roadmap setting out how the UK will modernise payments regulation, strengthen consumer protection and support innovation across retail and wholesale markets.
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The UK Payments Forward Plan 2026 to 2028: Transforming Regulation, Infrastructure and Digital Money
The UK government has published the Payments Forward Plan, a three year regulatory roadmap designed to modernise the payments sector and position the UK as a global leader in next generation financial infrastructure. Developed jointly by HM Treasury, the Bank of England, the Financial Conduct Authority and the Payment Systems Regulator, the plan brings together retail, wholesale and digital asset reforms under a single strategic framework.
The full document can be accessed here
This plan is not a narrow policy update. It is a coordinated programme of structural reform that will reshape payments regulation, strengthen consumer protection and embed innovation across the financial system.
A Clearer and More Predictable Regulatory Framework
At the heart of the Payments Forward Plan is a commitment to regulatory clarity. The document explains that previous reforms created congestion and uncertainty for firms. The new approach sequences initiatives over 2026 to 2028 to improve planning and reduce overlap.
One of the most significant changes is the proposed consolidation of the Payment Systems Regulator into the Financial Conduct Authority. HM Treasury will publish its consultation response in the first quarter of 2026, with implementation requiring primary legislation. This move is intended to streamline supervision and create a more coherent framework for firms operating across payments and wider financial services.
Alongside institutional reform, the government will conduct a comprehensive review of assimilated payments law, including the Payment Services Regulations and the E Money Regulations. A consultation paper is scheduled for the second quarter of 2026, followed by FCA rulemaking over 2027 and 2028. The intention is to shift detailed firm facing requirements into the FCA rulebook, allowing for more agile updates as technology evolves. The review will also consider updates to Strong Customer Authentication, financial inclusion measures and the regulation of emerging technologies such as tokenised deposits and agentic artificial intelligence in payments.
Stablecoins and Digital Innovation
A major feature of the plan is the integration of stablecoins into the UK’s mainstream regulatory architecture. The Bank of England and the FCA will operate a dual framework for systemic stablecoins, with consultations and policy statements running through 2026 and final rules expected by the end of that year. The broader FCA cryptoasset regime, including stablecoin issuance, is scheduled to go live in October 2027.
This approach signals that the UK does not view stablecoins as peripheral digital assets but as potential components of future payment infrastructure. The FCA has already launched a dedicated sandbox cohort for stablecoin issuers, while authorities are exploring how regulated stablecoins could support on chain settlement within the Digital Securities Sandbox.
In parallel, the design phase of the digital pound continues through 2026. HM Treasury and the Bank of England are expected to publish a blueprint and a decision on whether to proceed further. The digital pound project reflects the government’s commitment to exploring central bank digital currency while maintaining a cautious and evidence based approach.
Modernising Retail Payments Infrastructure
Retail infrastructure reform is another central pillar. A consultation on the future design of the UK’s retail payments infrastructure is expected in spring 2026, with further analysis and industry engagement to follow. At the same time, short term enhancements to Faster Payments and Bacs will be implemented by the end of 2026 to improve resilience and support innovation in account to account transactions.
Open Banking also enters a new phase. The plan outlines steps to move from the existing CMA Order framework towards a long term statutory model overseen by the FCA. By 2027, the aim is to establish a commercially sustainable structure capable of supporting widespread account to account payments, flexible bill payments and ecommerce solutions. This transition is essential to achieving the ambition of making account to account payments a mainstream alternative to cards.
Strengthening Wholesale Payments and Settlement
The wholesale payments agenda within the Payments Forward Plan is central to the UK’s ambition to remain a globally competitive financial centre. Wholesale infrastructure underpins everything from interbank transfers and securities settlement to large corporate and cross border transactions. Ensuring that this backbone is resilient, efficient and capable of supporting innovation is therefore critical to the wider economy.
A key development is the extension of settlement hours for RTGS and CHAPS. In early 2026, the Bank of England will publish its decision and policy statement on extending settlement into the early morning, alongside a consultation exploring the potential for near 24 by 7 settlement. Expanding operating hours would align the UK more closely with global markets, reduce liquidity bottlenecks and lower settlement risk, particularly for cross border activity. In an increasingly interconnected financial system, greater flexibility in settlement timing can enhance competitiveness and operational resilience.
The launch of the RTGS Synchronisation Lab in spring 2026 represents another important step. This non live testing environment will allow participants to demonstrate synchronisation use cases, including the interaction between payment systems and distributed ledger technology platforms. By enabling experimentation in a controlled setting, the Bank is supporting innovation without compromising the stability of live infrastructure.
The wholesale experiments programme, with a final report due in late 2026, will assess whether enhancements to the renewed RTGS service can meet emerging market needs or whether more transformative solutions, such as a wholesale central bank digital currency, may be required in the future. This reflects a forward looking approach to financial market infrastructure, recognising that tokenisation, programmable money and atomic settlement models could significantly reshape wholesale markets over the coming decade.
The Digital Securities Sandbox further complements this strategy. Open for applications until 2027, it allows firms to test live issuance and settlement of securities using distributed ledger technology within a modified regulatory environment. Authorities are also exploring whether regulated stablecoins could provide the payment leg for on chain transactions within the sandbox. This integrated approach brings together securities innovation and payment system reform, ensuring that developments in one area are supported by progress in the other.
Overall, the wholesale reforms outlined in the Payments Forward Plan demonstrate a commitment not only to maintaining resilience but to actively preparing the UK’s core settlement infrastructure for technological change. By extending operating hours, facilitating experimentation and examining the long term role of digital settlement assets, the UK is positioning its wholesale payments framework to support innovation while preserving financial stability.
Fraud, Safeguarding and Consumer Protection
While much of the Payments Forward Plan focuses on innovation and infrastructure, a significant proportion of the programme is dedicated to strengthening fraud prevention, safeguarding customer funds and improving consumer outcomes. The authorities are clear that technological progress must be matched by robust protections if trust in the payments system is to be maintained.
Authorised push payment fraud remains a central concern. The plan sets out an independent evaluation of the reimbursement requirement and fraud performance reporting framework during 2026. This review will assess whether the current regime is effectively incentivising firms to prevent fraud while ensuring fair outcomes for victims. The findings will help determine whether refinements are needed to strike the right balance between deterrence, compensation and proportionality. Alongside this, industry work continues on developing a dedicated claims management and data reporting system to streamline the reimbursement process and improve consistency across firms.
Safeguarding of customer funds is another priority area. The FCA’s Supplementary Regime for safeguarding will come into force in May 2026, strengthening requirements on payment institutions and e money firms. The regulator has indicated that it will review the effectiveness of the regime following a full audit cycle, with potential adjustments linked to the broader modernisation of payments regulation. At the same time, the Bank of England is exploring the possibility of offering overnight safeguarding facilities to certain non bank payment service providers that hold settlement accounts. If implemented, this could reduce risk exposure and enhance confidence in non bank providers while maintaining systemic resilience.
Consumer protection extends beyond fraud and insolvency safeguards. The FCA will carry out multi firm work examining how payments firms treat customers in vulnerable circumstances, with publication of good and poor practice findings expected in early 2027. This initiative aligns with the Consumer Duty framework and reinforces expectations that firms must deliver fair value, clear communications and appropriate support to customers who may be at greater risk of harm.
Taken together, these measures reflect a deliberate effort to embed higher standards across the payments sector. As digital transactions increase in scale and complexity, the regulatory focus is shifting from reactive enforcement towards preventative supervision and systemic risk reduction. By strengthening fraud controls, improving safeguarding arrangements and reinforcing consumer protection expectations, the Payments Forward Plan aims to ensure that growth in the payments market is underpinned by resilience, fairness and public confidence.
Cash, Competition and Cross Border Payments
Although the Payments Forward Plan places strong emphasis on digital innovation and next generation infrastructure, it also recognises that cash continues to play a vital role in the UK economy. For many individuals and small businesses, particularly in rural or vulnerable communities, access to cash remains essential. The plan confirms that the Financial Conduct Authority will conduct a post implementation review of the Access to Cash regime by 2027 to assess whether reasonable access has been maintained across the country. This review will examine whether the current framework is delivering on its objectives of financial inclusion, geographic coverage and consumer protection.
Alongside retail access, the Bank of England continues to oversee wholesale cash distribution under its statutory regime established by the Financial Services and Markets Act 2023. Through structured engagement with recognised firms and oversight of resilience arrangements, the Bank aims to safeguard the effectiveness and sustainability of the wholesale cash infrastructure. This dual focus on retail and wholesale cash demonstrates that digital transformation is not intended to displace cash prematurely, but rather to ensure a balanced and inclusive payments ecosystem.
Competition within card schemes and processing markets is another significant area of reform. The Payment Systems Regulator is progressing market reviews into scheme and processing fees as well as cross border interchange fees. These reviews are designed to increase transparency around pricing structures and assess whether fees are proportionate and competitive. Greater disclosure and clearer reporting requirements should improve accountability and enable merchants to make more informed decisions when selecting acquirers and payment providers.
Cross border interchange, particularly in card not present transactions between the UK and the European Economic Area, has been a point of concern for businesses facing higher transaction costs. The regulator’s analysis will help determine whether current fee levels reflect fair market conditions or require adjustment. Enhanced scrutiny in this area aligns with the broader objective of ensuring that the UK payments market remains competitive, efficient and supportive of economic growth.
International cooperation is also central to the UK’s strategy on cross border payments. The plan references forthcoming work by the OECD on improving transparency in retail cross border payments and remittances, as well as guidance updates from the Financial Action Task Force relating to payment transparency standards. In addition, the Financial Stability Board will publish further progress updates on the G20 roadmap for enhancing cross border payments. These initiatives are aimed at making international payments faster, cheaper, more transparent and more secure.
Taken together, these measures demonstrate that the Payments Forward Plan is not solely focused on domestic infrastructure reform. It seeks to strengthen the UK’s position within the global payments system by promoting fair competition, improving cost transparency and supporting international alignment on standards. By maintaining access to cash, addressing fee structures in card markets and contributing to cross border payment reform, the UK is attempting to balance innovation with stability, and competitiveness with consumer protection.
What the Payments Forward Plan Means for the UK
The Payments Forward Plan represents one of the most comprehensive overhauls of the UK payments landscape in recent years. It combines structural reform, legislative modernisation, infrastructure renewal and digital asset integration within a single, coordinated strategy. Rather than introducing isolated policy changes, it sets out a sequenced transformation programme designed to deliver long term stability and growth.
For banks and established financial institutions, the plan brings greater clarity around future supervision and regulatory expectations. For fintech firms and payment institutions, it signals formal recognition of emerging technologies such as stablecoins, tokenised assets and AI driven payment solutions within a structured regulatory framework. For consumers and businesses, the ambition is clear: safer payments, improved resilience, increased choice and stronger protection against fraud.
Crucially, the plan also acknowledges the importance of competition and cost transparency, particularly in relation to card schemes and processing fees. Ongoing market reviews and regulatory interventions are intended to improve pricing transparency and ensure that merchants benefit from a fairer and more competitive acquiring market. For many small and medium sized enterprises, merchant service fees remain a significant operational cost. Even marginal percentage reductions can translate into substantial annual savings.
This is where specialist support becomes essential. Payments World works directly with businesses to review existing merchant service agreements, analyse fee structures and identify opportunities to reduce processing costs. By leveraging market competition, negotiating improved rates and ensuring greater fee transparency, Payments World helps organisations lower their merchant services fees without compromising service quality or security. In an environment where regulatory reform is increasing scrutiny of scheme and processing charges, having an expert partner can provide both immediate financial savings and long term strategic advantage.
As the UK moves towards a more modern, digitally integrated payments ecosystem, businesses that actively manage their payment costs and regulatory exposure will be best placed to benefit. The Payments Forward Plan sets the direction. Firms that combine compliance readiness with cost optimisation will be able to strengthen margins, enhance customer experience and compete more effectively in an increasingly dynamic market.
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