.svg)
The UK’s Labour government has unveiled the country’s long awaited National Payments Vision (NPV), which aims to drive forward issues such as open banking and fraud prevention.
As part of this, the government has heralded account-to-account (A2A) payments as a way to spur innovation, reduce costs and increase choice for both consumers and merchants.
However, according to the NPV, achieving this will require an improved payments infrastructure and a focus on seamless user experiences.
Open banking is the way forward for this, the government has said, acknowledging that it has “significant untapped potential” and a vital role to play in achieving this ambition in the near-term; in particular, through unlocking A2A payments for e-commerce.
The NPV seeks to establish a sustainable regulatory framework for open banking, enabling innovation and competition while improving consumer choice and reducing costs.
By designating the Financial Conduct Authority (FCA) as the primary regulator for open banking and ensuring collaboration with the Payment Systems Regulator (PSR), the government plans to clarify regulatory roles and support growth.
The government also says that it recognises the significant threat posed by rising fraud in payments and is committed to working with law enforcement and industry to combat this crime.
It plans to reform strong customer authentication (SCA) rules, revoking rigid regulations to allow the FCA to create more flexible, outcomes-based rules that enhance fraud prevention and improve user experience.
The government additionally highlights the role of telecoms and online platforms in fraud prevention, urging these sectors to take proactive measures. Despite progress, fraud levels remain high, prompting calls for demonstrable action under the Online Safety Act and Ofcom’s oversight to curb abuses.
In the short term, the government prioritises enabling open banking for e-commerce and furthering pilots such as variable recurring payments. In the long term, it aspires to lead in open finance, leveraging data sharing to drive transformative opportunities for businesses and consumers across financial services.
The bigger picture
The UK has joined counterparts in Europe such as France, Ireland, the European Commission and the European Central Bank (ECB) in opting to create a National Payments Vision.
Like its neighbours, it sees A2A payments and improving the fraud outlook as crucial components.
Ireland, too, is banking on A2A payments for more choice and competition in the market, and has mandated the reporting of open banking data annually, as well as setting up an A2A payments working group.
Meanwhile, under France’s 2025-2030 strategy, the Payment Methods Security Observatory (OSMP) is mandated to lead national efforts to combat fraud, including with the misuse of telecommunications.
It will collaborate with the telecoms sector to enforce legal obligations and implement technical measures to prevent fraud, as well as monitor innovations in payment security and issue recommendations to maintain long-term protection.
This shows where governments and regulators' attention is turning in the payments world — accepting that SCA has meant fraud has shifted elsewhere, including to telecoms and big tech firms.
Next month, the PSR is due to publish data on the sources of fraud, which will only add fuel to the fire.
Although the NPV is not a silver bullet for the UK’s policy paralysis when it comes to payments, it does offer a way forward, which many in the UK payments ecosystem will be jubilant about.
Why should you care?
The UK government’s plans reveal a strong ambition to create a more competitive, innovative and consumer-focused payments ecosystem.
By promoting seamless A2A payments and scaling open banking, the plan could ultimately herald a new era for payment options, reducing reliance on traditional card payments, and bringing down costs for consumers and merchants alike.
The emphasis on regulatory flexibility, particularly in amending the incredibly prescriptive SCA rules, and the regulatory certainty that comes with the FCA leading open banking oversight, could be what is needed for a more dynamic environment where firms are able to adapt quickly to market changes and tackle fraud effectively.
In particular, the UK government’s plans could significantly impact payment initiation service providers (PISPs) and account information service providers (AISPs) for the better.
For PISPs, the focus on expanding A2A payments, especially in e-commerce, presents new opportunities for innovation and market growth.
For AISPs, enhancing open banking opportunities will increase demand for data-driven services, while the transition to broader open finance will enable more personalised financial tools.
Regulatory clarity from the FCA on open banking will support long-term planning and investment, which is something that the industry has been craving.
However, with the renewed momentum for payments modernisation, there are also challenges.
Payments industry insiders will be more than aware of how quickly these roadmaps can fall off kilter, considering how slow progress on payment modernisation initiatives such as variable recurring payments has been recently.
Expanding A2A payments, particularly for in-person transactions, requires significant technological advancements, including costly hardware and software development, and integration with existing systems such as Faster Payments may also pose complexities.
In addition, relaxing SCA requirements to enhance user experience may inadvertently increase fraud risks if robust safeguards are not implemented.
The FCA and market participants will be alert to this as the UK regime begins to diverge from the original EU-derived payment services framework.
Considering the lukewarm take-up so far (and the UK is a leader here in Europe), industry adoption of and consumer adaptation to open banking and new payment methods may be slow, especially among smaller merchants and/or less tech-savvy consumers.
As always, building consumer trust in new payment systems and data-sharing frameworks will be critical, as concerns around privacy and security may limit adoption.
