Payments in 2025 #4 – Future of retail payments

Policymakers in the EU and UK are, for now, allowing a diverse landscape of payment options to co-exist and compete.

Instant payments

The EU is leveraging regulation to encourage the take-up of instant payments as an alternative to cards. The first obligations under the EU’s Instant Payments Regulation start to apply in 2025. These require banks in the Eurozone to set themselves up to receive and send instant credit transfers in the euro at no extra cost to consumers. They also need to provide a verification of payee service for these payments.

In the UK, the Government’s National Payments Vision sees a future for account-to-account payments via Open Banking. The FCA has been tasked with driving forward Open Banking as a smart data scheme under the Data (Use and Access) Bill which will be made law later this year. The key will be finding a sustainable commercial model which incentivises further innovation in functionality.

Regulating stablecoins

The UK had planned a phased approach to regulating cryptoassets which would have prioritised stablecoins. Now it has confirmed that it will regulate stablecoin-related activities at the same time as other cryptoassets.

Draft cryptoasset legislation is expected early this year. In Q1 2025 the FCA will consult on draft rules on the backing and redemption of stablecoins and custody requirements as part of its wider crypto roadmap.

In the EU, MiCAR now applies in full subject to transitional measures. In April 2025 the European Banking Authority will opine on the interplay between PSD2 and MiCAR, specifically where cryptoasset service providers provide services with e-money tokens.

Central bank digital currencies

The European Central Bank and Bank of England, like other central banks, continue to consider the implications of issuing a central bank digital currency in the future.

While the ECB explores the route towards issuing a retail digital euro, legislators will progress the legislation needed to ensure that any future digital euro fits within the EU’s regulatory framework. For its part, the Bank of England has said that it would prefer retail banks to lead on innovation in this area but it is, at least, planning to continue its design phase for a digital pound over the next couple of years.

Date for the diary: 9 October 2025 – deadline for banks in the Eurozone to receive and send instant payments and apply verification of payee

This is the fourth in a series of five blogposts looking at the outlook for payments regulation in the EU and UK. Read our Payments Outlook 2025 for more.