What the UK’s New Retail Payments Infrastructure Means for Merchants
16 July 2025
Written by Libby James
Libby James is co-founder, director and an expert in all things merchant services. Libby is the go-to specialist for business with more complex requirements or businesses that are struggling to find a provider that will accept them. Libby is regularly cited in trade, national and international media.
Bank of England Framework
The UK is undergoing a major transformation in how retail payments infrastructure is managed and modernised. On 15 July 2025, the Bank of England released a new framework titled “A New Approach to Retail Payments Infrastructure,” outlining its vision for a more competitive, secure, and innovative payments ecosystem.
But what does this mean for UK merchants?
Here’s a breakdown of the changes, what they mean in practice, and how you can prepare.
A New Payments Model: What’s Changing?
The UK retail payments infrastructure is being restructured under a three-tiered governance model:
- Retail Payments Infrastructure Board (RPIB) – Led by the Bank of England to set the overall strategy.
- Delivery Company – An industry-led group that will design, fund and implement next-generation infrastructure.
- Pay.UK – Remains in charge of maintaining existing systems like Faster Payments and Bacs.
This collaborative public-private model is designed to accelerate innovation, enhance system resilience, and support the development of future payment methods, including the proposed digital pound.
Key Benefits for UK Merchants
✅ More Innovation, More Choice
Merchants may gain quicker access to alternative payment methods, including account-to-account (A2A) payments, QR code checkouts, and instant bank transfers — all without relying on card schemes.
✅ Faster Settlements and Fewer Outages
The new model prioritises infrastructure resilience and speed. This means reduced downtime, faster fund transfers, and improved refund processing.
✅ Increased Competition in Payment Services
By separating infrastructure from service provision, the UK is encouraging new providers and Fintechs to enter the market, potentially offering better rates and tailored merchant solutions.
Risks and Things to Watch
- No Immediate Changes, But Gradual Migration Ahead
Legacy systems will continue to operate, but merchants should prepare for future upgrades to stay compatible. - Potential Integration Costs
Over time, your POS, payment gateway, or accounting tools may need adjustments to connect with the new rails. - Digital Pound Ready?
The infrastructure will support both traditional payments and digital assets. Merchants may eventually need to accept retail digital currency alongside other methods.
Key Milestones
- Autumn 2025: The Strategy for retail payments infrastructure will be published.
- Late 2025: The Payments Forward Plan will outline upcoming initiatives across the entire ecosystem.
- October 2025: First meeting of the Retail Payments Infrastructure Board.
Wrapping it up for Merchants
This next-generation infrastructure isn’t just about payments plumbing; it’s about reshaping how UK businesses get paid. While many of the changes will take time, merchants must stay informed and prepared for the transition.
At Merchant Advice Service, we help businesses compare payment providers and navigate change confidently. If you’re unsure how these changes affect your business, speak to our team or use The Payments Directory® to explore options tailored to your industry.
FAQs
What is the UK’s new retail payments infrastructure plan?
The Bank of England and Treasury are overhauling how payment systems are governed and delivered. The new model introduces separate roles for strategy (Bank of England), implementation (industry Delivery Company), and system operations (Pay.UK).
Will my business need to change how it takes payments?
Not right away. Your card terminal or online gateway will continue working. But as new payment rails emerge, you may be offered lower-cost or faster alternatives.
Will this reduce my card processing fees?
Potentially. The infrastructure is being built to support non-card options like account-to-account payments, which often come with lower transaction costs for merchants.
Do I need to upgrade my payment systems now?
No. Existing systems will be supported for the foreseeable future. But staying informed through your PSP or payment provider is key to future-proofing your business.
What’s happening to Pay.UK and Faster Payments?
Pay.UK will continue running Faster Payments and Bacs, ensuring system stability while the new infrastructure is developed. It will also feed insights into the design process for new systems.
Will this support the UK’s digital pound?
Yes. The infrastructure will be interoperable with digital currencies, including the potential launch of a Bank of England digital pound. Merchants may eventually be able to accept digital money directly.
How will this affect refund speeds and settlements?
Improvements in speed and resilience could mean faster settlement of funds and real-time refunds, particularly through bank-to-bank rails.
How can I get involved or stay updated?
Monitor updates from the Bank of England, Pay.UK, and the Payment Systems Regulator (soon to be merged into the FCA). You can also contact your acquirer or PSP to ensure your business is prepared.
