By Alla Gancz, Payments Vertical Leader, Thoughtworks
The UK’s payment systems are entering an exciting new era of transformation, the most significant evolution in decades. On 15 July 2025, the Bank of England and HM Treasury unveiled a bold new approach to delivering the country’s retail payment infrastructure. This move could speed up the rollout of next-generation payment systems and put the UK at the forefront of innovation in payments. Picture a world where payments are faster, smarter, and safer. That’s the vision behind this transformation. And it’s not just a minor upgrade; it’s a complete rethink of how payments work and are delivered in a digital-first economy.
This announcement marks a change in how public authorities and the private sector can collaborate to build the real-time payments infrastructure of the future. After years of delivery challenges and fragmented approaches, the UK now has a coherent, collaborative framework that could, if implemented correctly, serve as a blueprint for other nations grappling with similar modernisation challenges.
A new era of collaborative governance
What’s changing isn’t just the technology, but also how it’s built. Public authorities and the private sector will be able to work together within a clear and coordinated framework. The foundation of this transformation rests on establishing a clear governance structure that sets out responsibilities whilst encouraging genuine collaboration between public and private partners. The new model introduces four separate but connected parts that work together to drive progress forward.
The Payments Vision Delivery Committee will continue to set strategic direction, building on the National Payments Vision and its core principles of innovation, competition, and security. At the heart of the new framework sits the creation of a Retail Payments Infrastructure Board, chaired by the Bank of England. This body will translate high-level strategy into detailed technical plans, ensuring that broad policy aims become practical, workable designs. Importantly, this board will include representatives from across the whole system: banks, fintechs, merchants, and consumer groups.
Supporting this governance structure, a new industry-led delivery company will handle procurement and implementation oversight. This marks a significant shift towards private sector expertise in delivery whilst maintaining public oversight of strategic direction.
This clear division of responsibilities tackles one of the most persistent challenges in infrastructure modernisation: the balance between maintaining operational stability and driving innovation. By separating operational duties from development activities, the new model creates room for bold experimentation while protecting the day-to-day running of critical payment systems.
Embracing tokenisation and focusing on digital money integration
One of the most exciting parts of this framework? It’s a clear focus on integrating new forms of digital money into the broader financial ecosystem.
This covers not only the possible launch of a Central Bank Digital Currency (CBDC), the digital pound, but also bringing in stablecoins and tokenised commercial bank deposits.
This focus on digital money puts the UK ahead in a worldwide shift in how we store, move, and use money. Traditional payment systems simply shift money records between accounts, but the next generation of systems will allow programmable money, digital value that comes with its own rules about how it can be used, when it moves, and what conditions must be met.
The effects of this change go well beyond just making things work better. Programmable money creates opportunities for completely new ways of doing business, from automatic supply chain funding to prices that change instantly based on what’s happening in the market. Smart contracts could handle complicated deals between multiple parties automatically, cutting down risk and removing the need for middlemen in many situations.
The framework’s acceptance of stablecoins as a proper part of the payment system matters significantly. By building interoperable systems that work seamlessly with stablecoins, the UK is preparing for a future where the lines between traditional and digital money continue to blur.
Technology driven architecture for operational resilience
Technology and execution is what will make, or break, this transformation. When looking at the design approach, it is important to consider that ecosystem participation and collaboration, leads to wider adoption and participation. Especially when the new governance model creates a framework for collaboration, but the underlying technology architecture will determine whether the UK achieves its vision of a truly next-generation payments infrastructure.
Cloud-native infrastructure marks a fundamental shift away from the mainframe-based systems that have dominated payments for decades. Building on cloud platforms from the ground up allows the new infrastructure to achieve levels of scalability, resilience, and cost-effectiveness that traditional architectures simply cannot match. Cloud-native design also allows rapid deployment of new features and services, so the payment system can evolve continuously rather than through occasional major upgrades.
Standardised, open APIs are equally important to the success of next-generation payment systems. Instead of the proprietary interfaces that have historically blocked innovation, open APIs allow any authorised participant to build services on top of the core infrastructure. This approach has already worked well in open banking initiatives, where standardised APIs have sparked a wave of innovation in financial services.
Integrating embedded trust layers represents another vital technological advance. Traditional payment systems rely on centralised databases and batch processing to manage risk and ensure compliance. Next-generation systems can build trust mechanisms directly into the transaction flow, using technologies like digital identity verification, real-time fraud detection, and automated consent management to provide security without compromising speed or user experience.
Tokenisation frameworks will allow the smooth integration of various forms of digital money into a unified payment ecosystem. Rather than building separate rails for different types of value transfer, tokenisation allows all forms of money to move through the same infrastructure whilst maintaining their unique characteristics and regulatory requirements.
Implications for financial services ecosystem players
The new retail payment infrastructure framework brings both opportunities and responsibilities for different types of financial services organisations.
Traditional banks face perhaps the most complex transition challenges. Their existing infrastructure investments represent both assets and liabilities in the new approach. While established customer relationships and regulatory expertise provide competitive advantages, older technology systems may become barriers to innovation if not properly modernised.
Banks must align their infrastructure plans with the forthcoming Payments Forward Plan, ensuring that internal systems can integrate effectively with next-generation payment systems. The emphasis on public-private collaboration means that banks cannot simply wait for new infrastructure to be delivered to them. Active participation in governance bodies and design committees will be essential.
Fintech companies stand to benefit significantly from the new framework, particularly through formal representation on the Retail Payments Infrastructure Board. This represents the first time that fintech perspectives will have direct input into national payment infrastructure design, potentially accelerating the integration of innovative approaches.
The focus on programmable money and digital assets aligns closely with fintech strengths in flexible development, user experience design, and emerging technology adoption. FinTech’s that can demonstrate strong compliance frameworks and operational resilience will find new opportunities to integrate directly with core payment infrastructure.
Payment Service Providers play a unique position in the new system, serving as intermediaries between the core infrastructure and end users. The shift towards open APIs and standardised interfaces reduces some traditional competitive advantages while creating new opportunities for value-added services.
Execution challenges and success factors
Getting this transformation right will come down to tackling some fundamental challenges that have tripped up major infrastructure projects before.
The biggest hurdle early on is nailing down exactly what we’re trying to build. When people talk about “next-generation infrastructure,” they often have completely different things in mind. Without everyone agreeing on the basic principles and what the system should actually do, we’ll end up with conflicting design choices and teams pulling in different directions.
The architecture must juggle tricky trade-offs: keeping existing systems working whilst building in genuinely new capabilities, ticking all regulatory boxes without stifling innovation, working for everyone whilst allowing for specialised services, and being rock-solid reliable whilst remaining flexible enough to evolve quickly.
Planning the transition is where many big projects come unstuck. Britain’s payment system handles millions of transactions every day, and even a brief interruption would cause immediate economic damage. We need a migration plan that keeps everything running smoothly whilst getting the benefits of the new infrastructure as soon as possible.
This probably means rolling things out in stages, bringing new features online bit by bit whilst the old systems keep ticking over. That requires tight coordination between multiple organisations and systems, plus thorough testing at each step.
The building blocks of real-time payments infrastructure
Creating a real-time payment system isn’t just about having the latest tech, it’s about building something that people actually want to use and that grows with them. Think of it like designing a city: you need the right infrastructure, useful services, and a happy population.
The World Bank’s Project FASTT has studied payment systems worldwide and found three key ingredients that make them successful:
- Start with what people need most: The best payment systems focus on solving real problems first, like helping small businesses get paid instantly. When you nail these everyday needs, people naturally start using the system more.
- Layer on services that make life easier: Once the basic “send money fast” part works, successful systems add features that make payments smarter and safer. Think fraud protection that works behind the scenes, or tools that help businesses manage their cash flow.
- Create room for everyone to innovate: The successful payment ecosystems don’t try to control everything. Instead, fintech companies and new players can build solutions for different groups. This competition and collaboration drives innovation and keeps costs down.
When you combine speed, affordability, and safety with real human needs, payments become a powerful force for economic growth, not just a utility, but a solution that helps economies thrive.
Global implications and competitive positioning
The UK’s new approach is happening alongside rapid changes and competition around the world. The shared governance model offers a different path from the more top-down approaches some other countries have chosen, though those centralised models might allow quicker decisions.
The UK’s focus on bringing digital money into the mix puts it in direct competition with other places pushing ahead with their own central bank digital currencies and digital asset projects. Singapore, Switzerland, and several Nordic countries have made real headway, so the UK needs to move fast to keep up.
Bringing traditional and digital forms of money together on one infrastructure platform could give the UK a real edge in attracting international financial services business. Cross-border payments could benefit hugely from infrastructure that can handle both traditional correspondent banking relationships and direct digital asset transfers in the same system.
The path forward
The announcement of the new retail payment infrastructure framework is just the start. The strategic framework expected this autumn will give the first proper sign of whether this shared approach can turn big ideas into workable plans. The full Payments Forward Plan due by the end of the year will be the blueprint for making it all happen.
The UK is at a crucial point in how its financial services develop. The new framework gives the governance structure and strategic direction needed for change, but success will ultimately come down to execution and whether all stakeholders are willing to work together towards shared goals.
Bringing together traditional and digital forms of money, adopting cloud-native technologies, and focusing on open, collaborative development are bold choices that could make the UK a world leader in financial innovation. The next twelve months will be crucial in deciding whether this ambitious vision can become real progress, with the global payment community watching closely to see whether this new approach can deliver on its promise.
