The Bank of England is pursuing a restructuring of the UK’s retail payments system, aiming to reduce reliance on card schemes. The initiative seeks to lower costs for merchants, increase competition, and create pathways for tokenized deposits and regulated stablecoins.
The restructuring was announced by the Deputy Governor of the Bank of England, Sarah Breeden, who emphasized its importance in reducing card operating costs as quickly as possible. In the announcement, she outlined a series of technical and regulatory options that will allow consumers to pay retailers directly from bank accounts, whether in-store or online.
The Bank is also exploring tokenized deposits and implementing everyday payments with stablecoins, under a strict and transparent regulatory framework for all participants.
Breeden pointed to specific problems, such as card fees averaging 0.6% of the transaction value for merchants and potentially being up to four times higher for smaller businesses, and therefore proposed direct account-to-account options as an alternative.
The regulatory steps the BoE must take
The BoE cites recent infrastructure work as evidence that it can implement the program. The Bank of England (BoE) completed a $431 million overhaul of its core Real-Time Gross Settlement (RTGS) system, which launched in April 2025. The updated platform was presented as a foundation for tokenized transactions and improved cross-border connectivity.
Breeden said the BoE will hold a public consultation in spring 2026 to gather input on future payment mechanisms for consumers and to shape the rules for any systemic stablecoin the market may adopt.
For merchants and SMEs, lower fees on A2A rails could free up working capital or pass cost savings on to consumers. For corporate treasuries and crypto teams, the formal exploration of tokenized deposits and regulated stablecoins expands the menu of settlement options—but also raises governance and operational questions that will require regulatory clarity.
