Modernising UK Payment Services: HMT consultation published 14 July 2026

HM Treasury has launched a wide-ranging consultation on reforming the UK’s payment services and e‑money regulatory framework. It aims to create a clearer, more agile regime that supports innovation, manages new risks and maintains strong consumer protections. The consultation covers updates to the Payment Services Regulations 2017 (“PSRs”) and Electronic Money Regulations 2011 (“EMRs”), new rules for tokenised payments (including stablecoins and tokenised deposits) and a long‑term framework for Open Banking under the Data (Use and Access) Act 2025 (DUAA).

The Government indicates they wish for a modern, predictable and proportionate framework that supports competition and innovation while protecting users, including through potential delegation of more detailed requirements to the FCA and retention of core statutory provisions. The package addresses fast‑moving developments such as tokenisation and AI‑enabled “agentic payments”, and seeks to maintain the UK’s position as a leader in payments and Open Banking.

Who is affected

Banks, e‑money institutions and payment institutions regulated under the PSRs/EMRs, Open Banking participants (ASPSPs, PISPs, AISPs), prospective issuers and payment service providers using UK‑issued qualifying stablecoins, interface bodies such as the forthcoming Open Banking “Future Entity” and operators/participants in commercial Open Banking schemes.

1) Updating the PSRs/EMRs and regulatory allocation

HMT is consulting on what should remain in legislation versus what should be moved into FCA rules, to enable agility whilst preserving legal certainty for key definitions, perimeters and essential rights and protections (for example termination notice rights). Where responsibility is delegated, statutory provisions would be removed and the FCA would consult on Handbook rules, including carrying over existing requirements where appropriate.

2) Tokenised payments and stablecoins

The Government intends to regulate the use of tokenised payments within the payments framework, including stablecoins and tokenised deposits, following a “same risk, same regulatory outcome” approach. Issuance of “UK‑issued qualifying stablecoins” is already a new RAO activity (article 9M), with FCA rules and potential systemic oversight by the Bank of England; such stablecoins can be treated as “money‑like” for payments, and HMT may recognise overseas regimes that deliver similar outcomes. HMT proposes to avoid duplicative permissions by carving specified activities in UK‑issued qualifying stablecoins out of new cryptoasset intermediary activities, while exchanges into other cryptoassets (e.g. Bitcoin) remain within cryptoasset dealing. For custody, HMT intends that safeguarding of UK‑issued qualifying stablecoins, when done in the course of providing payment services, should ultimately sit under the payments regime, with interim arrangements under consideration.

3) Payment services perimeter and permissions

HMT proposes to replicate the PSRs Schedule 1 activities but simplify them by merging certain account‑operation and execution activities, and by splitting “issuing instruments or acquiring” into two distinct activities, with all activities usable for both fiat and tokenised payments.

Authorised or registered firms would need an FCA variation of permission to offer tokenised payment services.

4) Agentic payments and sector risks

HMT is exploring how payment services rules (including authentication, consent and liability for unauthorised transactions) may need updating to facilitate AI‑driven agentic payments safely. Views are sought on proportionate measures to address new risks (including financial crime) and whether enhanced senior manager accountability in payments and e‑money firms would improve risk management.

5) Open Banking

Foundational PSR “Rights of Access” will remain in statute, and HMT proposes a new statutory right of access to support variable recurring payments, with scope options to keep obligations proportionate. HMT intends to give the FCA powers under the DUAA to set interface requirements for ASPSPs, PISPs and AISPs, to align with standards set by the Future Entity, to set guardrails for pricing, to require information‑sharing and participation funding and to govern dispute processes and communications.

Commercial Open Banking schemes will be industry‑led on a commercial basis; the FCA would have powers to require centralised pricing models, set pricing guardrails and, if needed, intervene directly in pricing. The FCA will be empowered to regulate the Future Entity as an interface body, including on standards, governance, monitoring and dispute processes, without enforcement powers residing in the Future Entity. HMT proposes maintaining free “sweeping” via variable recurring payments and invites views on continued publication of “product” and “reference” data.

FCA monitoring and enforcement would mirror its FSMA toolkit, with potential “compliance notices” under the DUAA and FSMA‑style confidentiality rules and gateways. The FCA’s FSMA objectives and “have regards” would be mirrored for the DUAA functions, with consideration of an additional DUAA‑aligned objective; the FCA would recover its Open Banking regulation costs from market participants.

Timing and process

The consultation is open for 12 weeks and closes on 6 October 2026. HMT indicates that changes to existing regulation will be made via secondary legislation and will set out further implementation detail after the consultation.