Payment System(s) Operator(s)
Payment systems are vital to the UK economy and play a remarkable role in ensuring that payment for the goods and services we all consume are efficient, safe, resilient and friction-free.
On its website home page the UK’s Payment System Regulator (PSR) states:
Every time anyone uses a cash machine, transfers money, uses contactless, or gets paid, they use a payment system.
Payment Systems Regulator
I am often asked ‘who are Pay.UK and what do they do?” - sometimes I think that the person asking the question ought to know the answer(!) but sometimes someone who has more recently appeared on the ‘payments scene’ has, not surprisingly, got a little bit confused.
With the demise of the New Payments Architecture (NPA), the revocation of the regulatory Specific Directions for the competitive procurement of the payments infrastructure and the current work of the Payments Vision Delivery Committee (PVDC) the question “who are Pay.UK and what do they do?” is now changing to “what does this all mean for Pay.UK?”
Let’s start with a quick recap on who Pay.UK are:
Pay.UK is the recognised operator and standards body for the UK’s retail interbank payment systems. Pay.UK provide the digital payments networks used by the UK’s banks, building societies, other payment providers and all of their customers to make payments, ensuring they are secure, safe and simple to use.
Pay.UK was created in July 2017 (as the New Payment System Operator) and launched as Pay.UK in 2018, bringing the three national retail payment schemes – the Bacs Payment System, the Faster Payment System and the Cheque and Credit Clearing Company (now the Image Clearing System) – together, into a single, consolidated operation.
This act fulfilled a key Payments Strategy Forum recommendation: for the UK to have one retail interbank payment system operator
New Retail Payments Infrastructure (NewRPI)
The documents already published by the authorities, and summarised in previous NewRPI emails, have made a few references to the future role of a Payment System Operator (PSO) and to Pay.UK as the current PSO for Bacs, Faster Payments and cheques.
This briefing provides a summary of these references and we will follow the future requirements of a PSO for the UK’s retail payment infrastructure:
National Payments Vision (NPV)
In relation to Pay.UK the National Payments Vision (NPV) restricts its references to the PSO to focus on the progress being made with the New Payments Architecture initiative:
Paragraph 2.19 offers praise for the success of Faster Payments:
The UK’s Faster Payments System (FPS), developed in 2008, was one of the world’s first instant payment systems, making transfers directly between individuals’ bank accounts, predominantly through internet banking . Although the UK’s retail payments landscape remains strongly comprised of card-based payments, the level of growth in Faster Payments is steadily rising, reaching 4.9 billion payments in 2023 and now comprising 10% of all payments made in the UK.
Paragraph 2.21 and 2.22 outlines concern regarding the progress being made by the NPA programme:
Upgrading the UK’s retail infrastructure is essential, but it has been slow, with the project to upgrade it – the ‘new payments architecture’ (NPA) – commencing in 2017. The Garner Review received many representations about the NPA. While written comments were mixed, the report described the views of contributors at interview as “forthright” and “emotive”, concluding “that confidence in a timely and successful delivery of NPA appears variable at best”.
Evidence taken during and since the Garner Review has not only been critical of the time and difficulty of making progress with the NPA. It has also surfaced more fundamental issues around the future of the UK’s infrastructure needs and capability, than just the NPA programme itself:
This included, in particular, concerns with the governance model for the UK’s retail payments infrastructure and therespective roles of the payment systems operator (Pay.UK), the regulators, and industry.
Concern was also raised about the risk of consuming the sector’s energy on a new payments architecture for retail payments while there remains uncertainty around what ‘the next generation of payments’ looks like and the implications for the UK’s marketplace.
Paragraph 2.28 noted the need for a strong and effective payment systems operator:
In addition to technological upgrades to the system, the government considers that the effective delivery of the UK’s retail payments infrastructure now and through time requires a strong and effective payment systems operator, and the current set of organisational arrangements could be improved.
The government has heard frustration at Pay.UK’s ability to work at pace to deliver programme change and to set direction, both from the organisation itself as well as various market participants. This tension needs to be resolved with a more effective set of arrangements put in place to enable swifter and more strategic decision-making while still reflecting the needs of all stakeholders to ensure that payment systems operate for the benefit of end users as well as the wider economy.
This is likely to require more effective governance arrangements and a more sustainable funding model.
Paragraph 2.29 noted that Pay.UK has delivered from an operational perspective:
Managing a payments system consists of both day-to-day operations and broader strategic investment and strategy-setting, in the interests of market innovation, competition, and to ensure adequate consumer protection. While Pay.UK has delivered from an operational perspective, it was originally established with the aim of delivering across a wide set of objectives.
However, as noted by Pay.UK itself, its design – and in particular its current governance model – has in practice made it very difficult to progress a strategic agenda as originally envisaged.
Under its current model, it is able to progress activities such as funding new infrastructure or enhancement projects only with the consent of its members or through the imposition of regulatory obligations.
And in paragraph 2.31 concluded that:
In light of the above, it is clear to the government that the sector would benefit from much greater clarity, direction and strategyregarding the UK’s retail payments infrastructure. Therefore, the newly established Payments Vision Delivery Committee will task the Bank and the PSR to examine and refresh the requirements for the UK’s retail infrastructure.
This work will:
- Provide greater clarity on the upgrades required to the UK’s Faster Payments System;
- Assess future requirements for the UK’s retail payments infrastructure, looking beyond the upgrading of Faster Payments to consider the needs and development of the UK’s retail payments at large; and
- Determine the governance arrangements needed to deliver this, including proposals to reform Pay.UK, drawing on international comparisons appropriately.
Payments Vision Delivery Committee (PVDC)
This led to the PVDC announcing in a policy paper issued on the 15 July 2025 that:
The Committee has agreed an innovative new model to deliver the next generation of UK retail payments infrastructure, supporting businesses and consumers across the economy.
The new model embeds public and private sector collaboration, utilising the right expertise in the right functions to drive transformation.
The model also supports short-term activity to enhance resilience and functionality of the existing Faster Payments System, which Pay.UK has been progressing with industry participants.
The paper also notes that the work of the proposed Delivery Company will engage with Pay.UK:
Having set the design, the Board will oversee its delivery by a new industry-owned and led Delivery Company, responsible for procuring and funding next-generation infrastructure.
The new model ensures the right expertise is driving activity at each stage of design and delivery, with clear mechanisms to ensure coordination, including with Pay.UK.
These will help provide the close alignment necessary to support a smooth transition to next-generation infrastructure in future - which will continue to be regulated by the PSR (FCA in future) and the Bank of England.
And that Pay.UK will retain its fundamental role as operator of existing interbank payment systems:
Through this new model, Pay.UK’s role is clarified and focused on the critical running of current interbank systems, optimising to maintain the resilience of these systems and ensuring they can best serve today’s ecosystem.
Pay.UK’s unique expertise will be fed into all levels of the new model, including through representation on the Retail Payments Infrastructure Board and Delivery Company.
Retail Payments Infrastructure Board (RPIB)
Pay.UK’s CEO is a standing member of the RPIB:
RPIB will oversee the delivery of infrastructure by a new industry-owned and led delivery company, which will be responsible for procuring and funding the next-generation infrastructure.
This model will ensure that the right expertise drives activity at each stage of design and delivery, with clear coordination mechanisms, including engagement with Pay.UK.
RPIB membership will automatically include the Chair/CEO of the Delivery Company, senior representatives from Pay.UK, and an observer from the FCA and PSR.
Pay.UK are listed as a standing member of the RPIB:
Standing members
Victoria Cleland (Bank of England, Chair)
Deputy Chair (Bank of England)
Vim Maru (Chair Designate, Delivery Company)
David Pitt (CEO, Pay.UK)
PVDC’s Strategy for Future Retail Payments
Whilst the work of the RPIB is to be forward looking paragraph 1.9 reinforces the need for the continuity of the existing schemes operate day Pay.UK:
In this context, it is essential that the Retail Payments Infrastructure Board’s work is forward-looking and considers the optimal future ‘set-up’ for the UK’s retail payments infrastructure, recognising that the ‘frontier’ of technological developments continuesto shift.
This means it needs to think beyond a like-for-like upgrade of the existing Faster Payment System and Bacs Payment System, while ensuring continuity of the services that users currently expect and rely on.
The RPIB has been charged with looking at the future of Pay.UK’s cheque scheme (paragraph 2.8):
Payments infrastructure must also support financial inclusion by enabling the provision of new and innovative forms of inclusive payment products and services – for example those with enhanced usability or flexible controls. More widely, access to cash remains vital.
The Committee recognises that due to declining usage, the cost of processing cheques is increasing. However, millions of cheques are still processed each year and a significant number of people – particularly vulnerable people, as well as some businesses, continue to rely on cheques.
The ability to process cheques, including via cheque imaging, therefore needs to be maintained, but the Committee is open to proposals by the Retail Payments Infrastructure Board about how this could be delivered more efficiently than today.
Pay.UK have a vital role to play by serving the eco systems of today and acting as a bridge to the eco systems of tomorrow (paragraph 3.4):
Pay.UK, the operator of the retail interbank payment systems, has a vital role to play. It continues to run and maintain the resilience of these critical systems, whilst also taking action to ensure they can best serve the ecosystem of today, and bridge to the ecosystem of tomorrow.
The short term enhancements to Faster Payments and Bacs should continue (paragraph 3.4):
In this context, important work on short-term enhancements to the current Faster Payment System and the Bacs Payment System is in train, with a view to improving resilience and better supporting innovation.
Going forward
The NewRPI newsletter will follow the story of the future role of a Payment System Operator (PSO) and of Pay.UK as the current PSO for Bacs, Faster Payments and cheques.
