Payments market update Q1 2025

Authorised Push Payment (APP) fraud remains a key issue for PSPs and their customers – as well as regulators. In this article, TLT’s Head of Financial Services Risk and Compliance Ben Cooper looks at the most recent regulatory reforms covering mandatory reimbursement of victims of APP fraud and how they may impact PSPs.

“Buy now, pay later” has enjoyed significant growth over the last few years among both consumers and retailers. However, the unregulated nature of the most prevalent BNPL models has drawn increasing focus from UK regulators and legislators. In October 2024, HM Treasury published long-awaited BNPL legislation in the form of the draft Financial Services and Markets Act 2000 (Regulated Activities etc) (Amendment) Order 2025 and related consultation.

The consultation has now closed and the final legislation is expected to land this year, with implementation currently scheduled for 2026. Businesses providing or leveraging BNPL solutions need to keep a close eye on these developments.  TLT can support you by advising on the potential impact of the upcoming legislation on contractual arrangements, compliance frameworks, operations and strategies.

Cryptoassets remain a key topic on the UK payments agenda and as related technology and use cases continue to develop, their growing prominence appears likely to continue.

The UK Government has reaffirmed its commitment to legislating for cryptoassets in the FS sector and, in November 2024, confirmed its intent to bring cryptoassets under the regulatory perimeter of the Financial Conduct Authority (FCA). The FCA followed up in December 2024 with a Discussion Paper to help inform the regulatory development of proposed admissions, disclosures and a market abuse regime for cryptoassets.

Interested parties have until 14 March 2025 to submit comments and TLT will continue to track and report on future developments.

Big Tech firms have played a key role in the development of digital wallets and enjoy a significant market share of users.

Last year, UK regulators looked at the potential impact of digital wallets including the role of Big Tech firms, and the FCA and PSR are expected to publish an update in Q1 2025.

In this article, we summarise the current state of play and some of the legal and regulatory considerations for UK businesses.

The UK Government recently announced that AI is a key pillar of its strategy for UK economic growth and is aiming to make the UK a world leader in the field.

The payments sector has been (and will continue to be) a fertile breeding ground for AI use cases, with its popularity continuing at pace. Alongside substantial benefits, AI adoption carries significant practical and legal risks.

In this article, we take a closer look at some of the key advantages and risks around using AI in the payments space, particularly some of the emerging legal and regulatory considerations.

In November, the UK Government published its National Payments Vision (NPV), setting out its plans to develop the UK payments sector as a key driver of economic growth.

The Government’s strategy intends to shape the future of the UK payments sector over the long term and as the vision develops, potential opportunities and challenges for market players will no doubt emerge – in this article we take a look at some of the key takeaways from the NPV.

The Payment Systems Regulator (PSR) published its latest strategy update this month - PSR Strategy update January 2025.  The focus remains on delivering impact by promoting competition, innovation and growth. 

In addition to exploring recent progress, including the rollout of Confirmation of Payee and reimbursement requirements to reduce APP fraud, market investigations to improve competition and increased market engagement, the strategy looks to the future.

Looking ahead, the PSR will focus on completing card market reviews, upgrading infrastructure (particularly for Faster Payments and by reforming Pay.UK), promoting Open Banking and variable recurring payments.  The PSR strategy update also references the National Payments Vision (see above) and the need for a more collaborative regulatory approach to drive growth and innovation.