Government announces measures to modernise payment services

The Government has announced new measures on how it intends to modernise payment services regulation and update it to support innovations in money and payments.

The measures include improving the regulation of payment services and electronic money by integrating it with the UK’s core regulatory approach for financial services. This will mean establishing a single, coherent framework for both traditional and tokenised payments, including both stablecoins and tokenised deposits.

It also intends to explore how the regulation of payment services should adapt to payments conducted by AI agents, as well as providing the FCA with new powers to regulate the future of Open Banking that will include underpinning the development of new Open Banking payments within commercial schemes.

Economic Secretary to the Treasury, Lucy Rigby, said “Fintech is true British success story, and we are backing the industry to maintain its competitive edge and go even further and faster in driving growth. Today’s package is our latest stake in the ground as we build a payments ecosystem that is secure, competitive and fully equipped to harness the opportunities created by rapid technological change.

“I also welcome our new Wholesale Digital Markets Champion, Chris Woolard CBE, who will help the government drive tokenisation in our markets – a critical shift for the next “digital big bang” for the UK sector.”

Chris Woolard CBE, Wholesale Digital Markets Champion, said “It’s an honour to be appointed Digital Markets Champion for the UK’s Wholesale Financial Markets Digital Strategy. As financial markets increasingly move away from manual processes to digital, tokenised systems, collaboration and an open two-way dialogue between the private and public sectors will best support the Strategy’s success, and will ultimately enhance the UK’s global competitiveness as a leader in digital markets.

“UK fintech benefits from Britain’s world leading financial services sector offering a thriving start-up ecosystem, global banks and insurers, leading universities, and a regulator that engages with innovation early so firms can test, learn and scale responsibly.”

Janine Hirt, CEO, Innovate Finance said ” The UK has all the ingredients to be a global superpower in fintech, payments and capital markets by leading in open banking, digital assets and stablecoin, and agentic AI. Unleashing innovators and championing transformation in markets is critical. We look forward to mobilising industry to work with Chris Woolard, Government and regulators to drive this strategic ambition and deliver at pace.”

Philip Belamant, Co-Founder and CEO, Zilch said “AI will fundamentally change how people interact with money, shifting payments from something consumers actively manage to something that is intelligently managed and optimised in the background. As this becomes a reality, it’s critical that regulation evolves to support innovation while maintaining strong consumer protections.

“We welcome the government’s focus on adapting payment regulation for AI-driven transactions. The UK has a real opportunity to lead globally in enabling agentic finance, helping consumers benefit from smarter, more efficient ways to manage their money.”