Towards the end of last year, the UK government published its long-awaited National Payments Vision (NPV). A year after former Nationwide CEO Joe Garner’s Future of Payments review – which called for more leadership and direction from government – and after a consultation period, HM Treasury has now published a policy that recognises the importance of payments to the UK economy and the need to change the status quo.
The Treasury’s vision is for the UK to have “a trusted, world-leading payments ecosystem delivered on next-generation technology, where consumers and businesses have a choice of payment methods to meet their needs”. It is seen as very much part of the government’s overall growth agenda.
Two key foundations need to be in place to deliver this ambition: a clear, predictable and proportionate regulatory framework, and a resilient payments infrastructure that supports innovation.
With this in mind, the NPV sets out clear actions to achieve the above ambition. These are broad ranging, demonstrating the wide impact of payments in the UK and the complexity of the payments ecosystem. The NPV acknowledges what hasn’t gone well in the UK and where things need to change, calling out a need for clearer direction from government and a less complex regulatory framework.
The NPV aims to bring together the whole payments ecosystem – regulators (including the Bank of England, Financial Conduct Authority and Payment Systems Regulator), the banks, card companies, payment companies, fintechs, trade associations and consumer groups are represented on the Vision Engagement Group (VEG). The Payments Vision Committee, which sits above the VEG, has been established to ensure coordination between the regulators and to provide a mechanism to facilitate prioritisation decisions on initiatives.
While the vision is expected to create more choice for payers, it will also create more complexity for those handling inbound payments and with implications for cash management
Every minute, more than 91,000 payments are made in the UK. According to Bank of England statistics, the average daily value of electronic transfers for 2024 (as reported in the Bank’s real-time gross settlement service figures) stood at £747bn.
This figure includes CHAPS, CREST, FPS and Bacs, as well as Visa Europe, Mastercard and Link. There was even £44m of cheque images made every day. That is a lot of money moving through the system, but the expectation is that this will move more to instant, real-time payments, a move that will have implications for treasuries.
While the vision is expected to create more choice for payers, it will also create more complexity for those handling inbound payments and with implications for cash management.
As Ritu Sehgal, head of transaction services and trade at NatWest Commercial & Institutional Banking, says: “We are moving into a universe where treasuries are increasingly assessed on efficiencies and more and more are a critical, strategic part of a firm’s business. As well as managing basics like ensuring rent and payroll are paid, they play an essential role in the risk management and profitability of a business.
“As payments become both real-time and instant globally, new opportunities and risks will emerge, because money touches every part of an enterprise. In due course this will mean always-on real-time monitoring of cash positions 24/7, for domestic payments and cross-border payments too.”
Change is not only happening in the UK. The European Payments Initiative (EPI), previously known as the Pan-European Payments System Initiative, is a unified digital payment service backed by 16 European banks and payment service providers.
Its aim is to allow European consumers and merchants to make next-generation payments for all types of person-to-person transfers and retail transactions via a digital wallet, called Wero. This wallet, launched in July 2024, is based on instant account-to-account payments and will eliminate intermediaries in the payment chain and their associated costs. The service is a European mobile payment system intended to replace Giropay in Germany, Paylib in France, Payconiq in Belgium and Luxembourg, and iDEAL in The Netherlands.
While cash will probably continue to fall in popularity over the next 10 years, the researchers expect the rate of decline to slow as its use becomes concentrated among people who strongly prefer it
While rumours about the death of cash may be exaggerated, it is clear that technological advances have been driving the shift to digital payments. It is, therefore, ironic that technology is also extending the life of more traditional payment methods.
This is borne out by official statistics. Figures recently released by trade association UK Finance and consultancy Accenture found that 85% of people in the UK now use contactless payment methods on a regular basis. But, according to the survey, cash remains the second-most frequently used method of payment. While cash will probably continue to fall in popularity over the next 10 years, the researchers expect the rate of decline to slow as its use becomes concentrated among people who strongly prefer it.
In the US, increasing use of digital payment methods, such as digital wallets and virtual cards, has led to a decline in the use of cheques, but they remain a prevalent form of payment. The reason behind this lies in technology. Cheque processes have been fine-tuned over decades by companies that adopt an ‘if it’s not broken, there’s nothing to fix’ approach. Banks and other financial institutions have invested heavily in solutions that mean lockboxes have come a long way since they were remote collection boxes. They can now offer capabilities such as scanning remittance information and converting the cheques into ACH transfers.
Philip Smith is editor of The Treasurer. This is an abridged version of an article that first appeared in The Treasurer (Issue 1 2025, p26-27)