According to Bloomberg, the Bank of England (BOE) is encouraging UK banks to adopt innovations that allow direct payments from bank accounts, bypassing credit and debit cards. This move aims to save consumers and retailers both time and money. In countries like Sweden and Brazil, people can already use phone numbers or QR codes to send cash through interbank payment systems that work alongside cards for retail transfers.
The BOE is advocating for similar advancements in the UK to maintain public control over money usage as households increasingly prefer card or mobile payments over cash. The central bank is also developing a Central Bank Digital Currency (CBDC), known as 'Britcoin,' with a decision from the government and Parliament expected around 2026 on whether to proceed with the digital pound. Currently, most UK retail payments rely on private money moving through commercial banks.
UK households can already make account-to-account transfers online and via mobile devices, with automated transfers available for bills and salaries as alternatives to credit and debit cards. However, the BOE notes a growing demand for direct payments and faster progress in other countries, highlighting the need for further innovation in the UK's interbank payment systems to keep pace with international and technological advancements.
The BOE's report outlines several policy outcomes for retail payments, including maintaining public trust in the one-for-one exchange between central bank and private money, building resilience across the payments chain, and ensuring proper governance models to protect against fraud. BOE Governor Andrew Bailey emphasized the importance of adapting to changing technologies and the increasing digitization of the financial system to preserve trust and confidence in the value of money.
Later this year, the UK Treasury is expected to publish a National Payments Vision, detailing the government's plans for the future of the UK payments landscape.