Payments View – September 2026

Payments View – September 2026

Welcome back to Payments View. This edition includes updates on:

• The Bank of England’s payments innovation objective
• Investment in UK payments
• FCA findings on payments firms’ support for vulnerable consumers
• FCA and BoE feedback statement on wholesale tokenisation and tokenised gold call for input
• PSR directions to Mastercard and Visa on card scheme and processing fees
• Updates for MLROs: AML and Asset Recovery Strategy

As always, don’t hesitate to reach out to us if you would like to discuss any of the developments in this edition.

Bank of England to gain payments innovation objective

HMT has announced that it will give the Bank of England a new secondary objective covering innovation and competitiveness in the payments sector stepping into the role vacated by the PSR.

The objective is in line with the FCA’s existing secondary growth and international competitiveness objective and expands the Bank’s existing secondary objective (which currently only covers innovation when regulating central counterparties and central securities depositories) to its regulation of payment systems, including those using digital settlement assets, such as stablecoins. The government’s focus is on digital payments technology, including tokenisation and DLT, which it sees as having “the potential to transform financial markets across the globe”.

It will be interesting to see how the objective will shape how the Bank approaches RTGS renewal, Faster Payments and CHAPS policy, and its supervision of systemically important firms in the payments chain.

Got a spare £50 million? Invest in UK payments

With Christmas decorations starting to appear in shops, the well-organised amongst us are preparing our letters to Father Christmas. At the top of the UK Payments Delivery Company’s wish list is an equity capital raise of approximately £50 million to fund the establishment of the company and progress its initial development milestones towards a new UK retail payments infrastructure.

The UK PDC, established by the Bank of England to support the future development of UK retail payments infrastructure and HM Treasury’s National Payments Vision, is already supported by nineteen organisations that came together to support the mobilisation phase following a call for initial funders in Q4 2025. This latest initiative sits within the NPV and the migration away from the previous New Payments Architecture programme.

The £50 million equity capital raise is a significant next step in standing up the UK PDC. The involvement of established global banks and UK and European fintechs already speaks to the breadth of, and interest in, the UK market. Opening up access to innovation is a positive step, particularly moving away from the approach that the NPA struggled to deliver.

Consumer demand for innovation will be the real test as UK PDC works to implement the NPV. The rapid uptake of offerings such as Pay by Bank at major marketplaces (including Amazon and eBay) suggests that consumers are willing to adopt new payment methods of the kind UK PDC has in its sights.

FCA findings on payments firms’ support for vulnerable consumers

The FCA has published the findings of its multi-firm review of how payments firms (including non-bank PSPs, their agents and distributors) identify and support consumers in vulnerable circumstances. The findings set out supervisory expectations and highlight both good practice and areas where firms need to improve. Covering the following areas the review sets out what the FCA has found across the industry:

• Identifying and recording consumers in vulnerable circumstances
• Supporting consumers in vulnerable circumstances
• Consumer understanding and communications
• Governance, management information (MI) and outcomes monitoring
• Overseeing intermediaries

The review sits within the FCA’s ongoing work on the Consumer Duty and is the first sector-specific FCA vulnerability review focused squarely on payments firms. It raises a number of challenges that firms face, in particular, that many firms have insufficient processes to identify vulnerability at onboarding and through the customer journey, that staff training is inconsistent, and that product design and communications often do not reflect the needs of consumers in vulnerable circumstances. Complaints handling was identified as a specific area where practice needs to improve.

PSPs should also benchmark their current vulnerability frameworks against the findings, particularly around identification, staff training, product design and complaints handling.

FCA and BofE feedback statement on wholesale tokenisation and tokenised gold call for input

The FCA and Bank of England have jointly published a feedback statement on tokenisation in wholesale financial markets, together with a targeted call for input on a tokenised gold use case. The feedback statement responds to earlier engagement under the Digital Securities Sandbox and adjacent workstreams.

The tokenised gold call for input is designed to test how existing regulatory frameworks (custody, settlement finality, centralised securities depository requirements, market integrity) map onto a familiar underlying asset represented in tokenised form. Firms considering wholesale tokenisation projects should treat this as an invitation to engage, particularly on how existing Delivery v Payment, settlement finality and CSD frameworks apply to DLT-based arrangements.

The call for input closes according to the timetable set out in the FCA and Bank publication. We think this is an interesting development, particularly with firms looking to move beyond the tokenisation of deposits. Firms with material tokenisation initiatives should consider responding, both on the gold-specific questions and on the wider structural questions raised in the feedback statement.

PSR issues directions to Mastercard and Visa on card scheme and processing fees

The PSR has published its policy statement giving directions to Mastercard and Visa to implement the Information, transparency and complexity remedy and the Pricing Governance remedy from the PSR's market review of card scheme and processing fees, imposing transparency, consultation and cost-based justification requirements on scheme fee changes.

The PSR’s underlying review found that competition in the supply of card scheme and processing services is not working well and that Mastercard and Visa have exercised significant market power [– shocking, we know]. The directions are intended to constrain that market power through procedural requirements rather than a hard price cap. Of these:

• The ITC Direction will require the schemes to provide acquirers with clearer and more detailed information about the scheme and processing fees they are charged, including information to help reconcile fees with the transactions that generated them.
• The Pricing Governance Direction will require the schemes to improve governance and maintain better evidence for their pricing decisions, improving accountability and helping us to better understand how those decisions are made.

For card acquirers and merchants, the directions will require new visibility into scheme fee changes and their justifications, supporting better contract negotiations and internal cost forecasting. Specific Direction 22 (information, transparency and complexity) takes effect on 30 July 2027 and Specific Direction 23 (pricing governance) takes effect on 30 November 2026, with the first acquirer notification letters under SD22 due by 30 October 2026.

Updates for the MLROs: AML and Asset Recovery Strategy Update

HMT and the Home Office have jointly published a new AML and asset recovery strategy covering 2026–2029. It sets out cross-agency priorities for combating money laundering, terrorist financing and asset recovery, and identifies reforms to the SARs regime, international asset recovery cooperation, and the use of new technologies in the government’s response to economic crime, confirming that the UK’s financial-crime effort remains coordinated across HMT, the Home Office, the FCA, the NCA and law enforcement.

Firms should read the strategy alongside their annual financial-crime risk assessments, particularly in relation to SARs, sanctions and cryptoasset-related risks. Payments firms – EMIs, PIs and BaaS operators – should expect the FCA and NCA to continue prioritising financial-crime supervision, and to face increased scrutiny of governance, MI and staff training in this area.

The strategy follows the 2023–2026 Economic Crime Plan and lands alongside the 2026 amendments to the MLRs (covered in our last edition), as well as AMLA’s final ITS on direct supervision and FATF’s continuing implementation review of Recommendations 15 and 16. On these:

• AMLA has published its final report on draft implementing technical standards (ITS) under Article 15(3) of the AMLA Regulation, covering co-operation in the EU AML/CTF supervisory system for the purposes of AMLA's direct supervision. From 2028, AMLA will directly supervise financial institutions that operate in at least six Member States and have a high money-laundering and terrorist-financing risk profile; the draft ITS set out how AMLA and national supervisors will co-operate to deliver continuity and consistency in AML/CTF supervision, including how the selection process will be carried out (from data collection to publication of the list of selected financial institutions) and how operational issues will be handled when firms transition between national supervision and direct AMLA supervision.
• FATF has published its seventh targeted update on how jurisdictions are implementing its standards on virtual assets and virtual asset service providers (VASPs) under Recommendation 15 (new technologies) and Recommendation 16 (payment transparency – the "travel rule"). While not one for ‘traditional’ payments firms, this update will be of interest for those firms that are also involved in virtual assets.

News Flash

• Vocalink partners with National Preparedness Commission to share its experience operating the UK's core payment systems as part of the wider ongoing discussions on the national resilience agenda.
• PSR consults on Confirmation of Payee changes. The PSR has opened a consultation on broadly administrative changes to the Confirmation of Payee (CoP) system, addressing scheme reach, participation obligations for smaller PSPs, and performance requirements.
• Home Office call for evidence on unauthorised fraud. The Home Office has opened a call for evidence on the future of unauthorised fraud policy, seeking views on the scope of the current framework and possible reform options. Responses are due by 7 October 2026.
• APPG on Financial Markets and Services and CryptoUK raise banking-access concerns. The APPG on Financial Markets and Services, working with CryptoUK, has raised concerns about banking access for UK cryptoasset firms and called for FCA and HMT engagement on the issue.
• FCA multi-firm review on frontier AI and cyber resilience. The FCA has published findings from a multi-firm review on how firms are managing operational and cyber resilience risks associated with the use of frontier AI models.