UK modernizes retail payments infrastructure with BoE leadership
Sarah Breeden outlines the Bank of England's central role in renewing the UK's retail payments infrastructure. The initiative aims to enhance functionality, competition, and resilience for future digital payments.
Building the future of UK payments
The UK has established a new institutional model to deliver its next-generation retail payments infrastructure, announced at Mansion House in July.
The Payments Vision Delivery Committee sets the strategy, with the Bank of England leading its translation into design.
The Retail Payments Infrastructure Board (RPIB), chaired by Victoria Cleland, oversees this design, while a new industry-led Delivery Company will procure and build the infrastructure.
Pay.UK continues to operate current systems and implement short-term enhancements.
A primary goal is to offer UK consumers an account-to-account payment option in-store and online, complementing existing card schemes.
This aims to boost competition, potentially lowering merchant costs (currently averaging 0.6% of transaction value for cards), and improving resilience by adding an extra payment rail.
Achieving this requires not just infrastructure upgrades but also robust scheme rules, a viable commercial model, and strong consumer protection.
Embracing a multi-money future
The new retail infrastructure aims to enable the seamless exchange of traditional and tokenised money, fostering a 'multi-money' ecosystem.
This includes traditional bank deposits, tokenised versions of those deposits, systemic stablecoins (with a regulatory regime to be finalised this year), and potentially a digital pound.
This expanded choice is expected to drive lower costs and greater functionality for users, ensuring interoperability and maintaining monetary and financial stability.
The infrastructure will facilitate seamless exchange between different forms of money, ensuring £1 of one equals £1 of another.
This is crucial to avoid fragmentation and promote competition in digital money.
Ambitious vision, complex path
The Bank of England's ambitious vision for next-generation payments is crucial for the UK's digital economy.
Its implementation, however, faces significant technical and coordination hurdles, demanding sustained public-private collaboration.
Success hinges on delivering tangible user benefits while rigorously safeguarding financial stability and consumer trust.