Bank of England takes control of UK payments overhaul

The Bank of England has been handed the reins of a long-overdue reform of the UK’s retail payments infrastructure, as Governor Andrew Bailey issued a stark call for urgent modernisation in his Mansion House address on Tuesday night.

Bank of England takes control of UK payments

Describing the need for innovation as “urgent”, Bailey declared that building a next-generation retail payments system must now be a national priority.

The decision follows years of faltering progress under Pay.UK, the industry body that launched the ill-fated New Payments Architecture programme in 2017.

Despite reports that the contract would be awarded to Tata Consultancy Services, the project failed to materialise — ultimately triggering the transfer of responsibility to the central bank.

Retail Payments Infrastructure Board

The BoE will now lead the Retail Payments Infrastructure Board, collaborating with the Treasury and the Financial Conduct Authority on the high-level strategic direction.

A formal plan is expected later this year, aimed at replacing the Faster Payments System, which handled a staggering £4.2 trillion in transactions in 2024.

Originally launched in 2008, Faster Payments was once at the vanguard of global retail payment technology.

But in today’s environment of real-time, cross-platform demand, it has been left behind — especially when it comes to enabling instant, account-to-account payments in-store and at physical points of sale.

Bailey argued that this infrastructure overhaul is vital not only to replace ageing systems, but also to underpin future economic growth.

It could also shift power away from the entrenched duopoly of Visa and Mastercard — a central issue as transaction costs rise and concerns grow over domestic sovereignty in payments infrastructure.

Mastercard’s ownership of Vocalink, the current operator of Faster Payments, came under scrutiny last week when the firm was fined £11.9 million by the BoE for failures in risk management and governance.

BoE Intervention

Industry figures have welcomed the BoE’s intervention.

John Howells, CEO of Link, said the move “will unlock a decade of slow progress in UK payments,” with the potential to spur innovation and support the digitisation of Sterling.

Kanv Pandit, head of International Banking & Payments at FIS, also stressed the importance of delivery.

“The forthcoming Payments Forward Plan must mark the shift from vision to execution,” he said. “This is a critical moment for regulators, banks, fintechs and infrastructure providers to come together.”

The central bank is now expected to oversee a fresh procurement process, with early indications suggesting that a consortium model, potentially bank-owned, could be revived to replace Vocalink’s role.

As geopolitical tensions reshape global finance and digital transformation accelerates, the BoE’s leadership may prove decisive in ensuring the UK’s retail payments remain competitive, resilient, and fit for the future.