LONDON — The Bank of England said Monday it will open a public consultation this spring on new ways for shoppers to pay merchants directly from their bank accounts, broadening choice beyond debit and credit cards, Feb. 2, 2026. Deputy Governor Sarah Breeden said in a keynote speech the goal is a “pay-by-bank” option that could spur competition, reduce costs and provide a fallback if one payment route is disrupted.
Bank of England consultation focuses on paying straight from bank accounts
In Britain, cash now accounts for less than 10% of transactions, while debit and credit cards make up close to two-thirds — a tilt that leaves Visa and Mastercard central to most retail spending, according to figures cited in a Reuters report. Breeden said consumers should have the option to “pay retailers directly out of their bank accounts,” alongside cards.
The Bank of England said the consultation will examine how direct account-to-account payments could work for both in-store and online purchases and what safeguards and technical standards would be needed for a service that people can trust. Breeden said more competition could also help lower transaction fees, especially for small retailers — which the bank said typically pay about four times as much as the largest chains — while improving resilience against cyberattacks, outages and other operational shocks. The bank said it will also set up panels to gather input from groups outside the finance industry before the formal consultation begins.
What the overhaul could mean for merchants, fintechs and digital money
Rather than trying to replace cards, the Bank of England is framing the project as an additional rail that can sit alongside card schemes and existing bank transfer services. The central bank noted the U.K. was an early mover on instant payments with Faster Payments in 2008, but it pointed to India’s UPI, Brazil’s Pix and Sweden’s Swish as examples of bank-to-bank systems that now sit comfortably beside cards and mobile wallets.
The initiative is also tied to the government’s wider payments reform push. The National Payments Vision calls for faster upgrades to the U.K.’s core retail infrastructure, guided by innovation, competition and security. Breeden said the next-generation design is intended to support seamless exchange between traditional bank money and newer forms of digital money, including tokenised deposits and stablecoins, and to help lower the cost of cross-border retail payments.
In a separate address at the same summit, the Financial Conduct Authority argued that resilience comes partly from choice — multiple payment options that can keep commerce moving if any single system falters.
Bank of England push builds on earlier pressure for cheaper, safer payments
The consultation follows years of debate about fees, fraud and the balance of power in payments. In 2024, Visa said it would upgrade its U.K. pay-by-bank services to offer stronger safeguards for recurring account-to-account payments, Payments Dive reported. That same year, the Bank of England told payment firms to step up disruption planning ahead of tougher operational resilience standards due by March 2025, according to a separate Reuters report.
Before the spring consultation opens, Breeden said the Bank of England will convene panels to gather feedback from consumers, retailers and other groups outside the financial sector. Any new option is unlikely to fully displace cards, she said, but officials want a broader mix of ways to pay at the checkout as the U.K. economy becomes more digital and less cash-dependent.
