National Payments Vision 2024: The UK's Vision for a World-Leading Ecosystem

The ability to make and receive payments underpins daily life and commerce, while the payments sector itself drives innovation and hosts some of the country’s highest growth businesses. To bolster this pivotal sector, the UK government has published the National Payments Vision, outlining its ambition for a world-leading payments ecosystem.

The Vision responds to the findings of the independent Future of Payments Review 2023, led by Joe Garner, and addresses key challenges in the payments landscape. By tackling regulatory inefficiencies, modernising infrastructure, and fostering innovation, the government aims to enhance the sector’s role in driving economic growth and maintaining the UK’s global leadership in financial services.

Implementation Framework: A Multi-Faceted Approach

The implementation of the National Payments Vision will be guided by a robust governance framework, spearheaded by the newly established Payments Vision Delivery Committee. This senior cross-authority group, chaired by HM Treasury, will ensure that strategic priorities are effectively aligned and pursued across various regulatory bodies, including the Financial Conduct Authority, the Payment Systems Regulator, and the Bank of England. The committee will also oversee the development of the Payments Forward Plan, which will provide a sequenced regulatory roadmap, detailing specific initiatives and their respective timelines.

Collaboration will play a central role in the implementation process. The committee will be supported by the Vision Engagement Group, which will bring together representatives from financial institutions, fintechs, merchants, and consumer advocacy organisations. This inclusive approach ensures that decisions are informed by a wide array of perspectives, fostering a more balanced and comprehensive strategy for the payments ecosystem.

A significant focus of the Vision is the modernisation of the UK’s payment infrastructure. The Faster Payments System (FPS), which has been a global benchmark for instant payments since 2008, is due for a substantial upgrade. The New Payments Architecture (NPA) initiative aims to transform the FPS by introducing real-time settlement capabilities, enhancing data interoperability through the adoption of ISO 20022 messaging standards, and integrating distributed ledger technology (DLT) to improve transaction efficiency and security. These advancements will not only bolster the resilience of the UK’s payment infrastructure but also support the growth of innovative payment methods, such as seamless account-to-account transactions and advanced e-commerce solutions.

The Vision also seeks to streamline the regulatory environment to support innovation while maintaining robust consumer protections. The Garner Review highlighted the challenges posed by regulatory congestion, where overlapping mandates among different regulatory bodies create inefficiencies and increase compliance costs. To address this, the government has issued a joint remit letter to the FCA and PSR, outlining their responsibilities and aligning their objectives with the Vision’s goals. Additionally, the existing Memorandum of Understanding (MoU) between the FCA, PSR, and Bank of England will be revised to clarify roles and responsibilities, reduce duplication, and enhance overall coordination.

Open Banking and Open Finance are at the heart of the Vision’s innovation agenda. Since its introduction under the Competition and Markets Authority (CMA) order in 2017, Open Banking has enabled consumers to securely share their financial data with third-party providers, fostering a wave of innovation in financial products and services. The government now aims to expand Open Banking into Open Finance, creating a more comprehensive framework for data-driven financial innovation. This will include the development of Variable Recurring Payments (VRPs), which offer greater flexibility and control for recurring transactions, and the enhancement of API standards to support more seamless and secure data sharing.

The exploration of a Central Bank Digital Currency (CBDC), known as the digital pound, is another pivotal aspect of the Vision. This digital currency is envisioned to complement cash and other digital payment methods, providing a state-backed, risk-free digital payment option. The implementation process will involve extensive testing during the design and pilot phases, with a focus on maintaining financial stability, protecting user privacy, and promoting financial inclusion. Any decision to roll out a digital pound will be subject to legislative approval, ensuring comprehensive parliamentary oversight and public consultation.

Security and consumer trust are fundamental pillars of the Vision. The government is committed to addressing the growing threat of fraud, which not only undermines consumer confidence but also incurs significant economic costs. Enhanced fraud detection measures, such as real-time transaction monitoring and AI-driven risk assessments, will be deployed to prevent fraudulent activities more effectively. The Vision also emphasises the importance of robust consumer protections for non-card-based transactions, addressing the disparity in protections between bank transfers and card payments by introducing new regulatory measures and a centralised dispute resolution mechanism.

The adoption of digital identity solutions is another key initiative aimed at enhancing security and user convenience. Under the UK Digital Identity and Attributes Trust Framework, certified providers will offer secure digital verification services, reducing the reliance on traditional identifiers like account numbers and sort codes. This initiative will streamline person-to-person payments, minimise errors, and create a more seamless and efficient payment experience.

Through targeted regulatory reforms, infrastructure modernisation, and a commitment to innovation, the government aims to create a payment system that is resilient, inclusive, and globally competitive. The success of this vision will hinge on collaboration between public and private stakeholders, ensuring the UK remains at the forefront of payments innovation and economic growth.