Payments - some key legal / regulatory updates for 2025

In this article, we outline some of the key payment method developments to be aware of and how they may affect key participants in the payment sector.

Buy Now Pay Later (BNPL)

The significant growth of BNPL, coupled with the lack of regulation around the most prevalent models, has drawn increasing focus from UK regulators and legislators in recent years. In October 2024, HM Treasury published its draft Financial Services and Markets Act (Regulated Activities etc) (Amendment) Order 2025. The final legislation is expected to land this year, with the proposed implementation taking place in 2026.

The new legislation is likely to increase the compliance burden for businesses when accepting BNPL payments, particularly around customer affordability checks and risk disclosures.

Businesses should track the new legislation closely with their BNPL providers to prepare for the impact. Based on the draft legislation, this may require updates to marketing, point of sale messaging and customer payment journeys. Provided they stay on top of the new regulatory requirements, BNPL will continue to present opportunities for payment service providers (PSPs) to expand their services, attract new customers, and strengthen relationships with merchants.

PSD3 and PSR updates

The EU is finalising PSD3 and the UK is separately updating its own Payment Services Regulations. The regulatory updates focus on Open Banking technologies, financial data sharing, safeguarding customer funds and improving competition.

The regulatory updates are likely to accelerate Open Banking (account-to-account) payment services and market competition, tightening fraud prevention and improving consumer rights. These developments should, in turn, enable businesses to offer their customers a wider range of payment options. The businesses most likely to take advantage of these developments will be those contracting with dynamic PSPs, who can offer secure and streamlined access to multiple card and non-card based payment options. For PSPs, this means navigating the stricter licensing and supervision requirements, implementing enhanced fraud prevention measures, and navigating the ever-evolving Open Banking landscape.

Digital wallets

Digital wallets (like Apple and Google) have had exponential growth in the payments space, attracting the attention of UK financial regulators.

We discuss the Financial Conduct Authority (FCA) and the Payment Systems Regulator (PSR) joint Call for Information on Big Tech and digital wallets in our February article.

The FCA and PSR subsequently published a joint feedback statement, following their ‘Call for Information’ into the impact of Big Tech and digital wallet technology on UK consumers and businesses. The joint feedback statement highlights several potential issues, including concerns around consumer protection and competition, which both regulators will continue to monitor.

How TLT can help

The advances in payment methods and related services will continue, with regulatory developments certain to play a key role in how both customers and suppliers leverage opportunities in this space.

TLT’s Payments team includes specialists covering the payments, FS regulatory, data privacy and competition law issues impacting payment suppliers and procurements and is very well placed to advise both suppliers and customers in respect of any regulatory changes and their impact on contractual arrangements, operations and future strategy.

If you would like to talk to us in more detail to discuss how we can help you, please do get in touch.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2025. Specific advice should be sought for specific cases. For more information see our terms & conditions.