Updates on payments initiatives
Adam Scarrott, Director of Payments at UK Finance, joined today’s Finance Community call to discuss developments in payments innovation and regulation, and to set out UK Finance’s views. A summary of what was discussed is below, alongside next steps. The slides are also attached.
- The deadline for submitting the completed BRC Payments Survey (26th May) was also flagged – please respond if you have not yet done so. The survey can be found here.
- The date for the in-person Finance event has been changed from 13th May to 10th June. More details here.
Summary – Payments Update (Adam)
1. Contactless Limits
What was discussed:
- Contactless limits are enforced by card schemes and terminals, not individual issuers.
- Transactions above the £100 CVM limit automatically require Chip & PIN.
Key points:
- No action required from retailers or PSPs at this time.
- Any issuer-led changes (e.g., higher limits) won’t override terminal rules.
- Retailers operating across markets should ensure market-specific terminal configurations.
- Industry preference remains consistent customer experience, though:
- Merchants can lower limits via acquirers based on risk appetite.
- Changes to limits are not a current priority and are years away.
- Any future changes would be coordinated and clearly communicated.
Next steps:
- No immediate action.
- Monitor for future scheme/regulatory updates.
2. Accessibility in Payments
What was discussed:
- Ongoing work to improve payment accessibility, particularly for visually impaired users, with collaboration across industry and advocacy groups.
Key points:
- Accessible card design launched (tactile notches, improved contrast), with strong adoption across issuers.
- Significant issues remain with touchscreen terminals:
- No standard way to trigger accessibility mode
- Low awareness among staff and customers
- Existing solutions (e.g., overlays) are inadequate and may pose risks
- Evidence shows poor usability leading to:
- Abandoned purchases
- Reversion to cash
- PIN sharing (security risk)
- Recommended improvements:
- Audio guidance (with careful consideration of fraud risks)
- Headphone/assistive options
- Retention of physical PIN pads alongside touchscreens
- SoftPOS identified as a future challenge due to lack of accessibility features.
- Industry moving toward:
- Standardisation and certification (“trust mark”)
- Alignment with European accessibility developments
Next steps:
- Draft report and code of practice to be issued mid-June.
- Retailers to review and provide feedback within 2–3 weeks.
- Consider procurement alignment with accessible-by-design standards.
- Ongoing engagement with manufacturers, PSPs, and industry groups.
3. Consumer Credit Act Reform (Section 75)
What was discussed:
- Proposed reforms to modernise Section 75 and improve efficiency while maintaining consumer protection.
Key points:
- Current framework is complex, outdated, and operationally inefficient.
- Key issues:
- Long-term, open-ended liability
- Inconsistent application
- Barriers to lending (e.g., green finance)
- Proposed reforms:
- Simplify scope and align with modern payment journeys
- Introduce liability caps and time limits
- Expand applicability but reduce unpredictability
- Shift toward a “supplier-first” model:
- Consumers expected to engage with merchants before escalating
- Merchants incentivised to resolve disputes earlier
- Implications for retailers:
- Greater focus on refund processes, evidence, and dispute handling
- Ongoing concerns:
- Rising chargeback volumes and fraud
- Section 75 continues to set a high benchmark for consumer protection, impacting development of alternative payment methods.
Next steps:
- HM Treasury consultation expected (timing TBC).
- Retailers to:
- Monitor and prepare to respond
- Review internal processes for dispute handling and evidence
- Continued industry work on chargebacks, fraud, and alternative protections.
4. Account-to-Account (A2A) Payments
What was discussed:
- Development of A2A as a long-term alternative to cards, driven by regulators and industry.
Key points:
- Objectives:
- Increase competition, resilience, and reduce costs
- Enable innovation and direct customer relationships
- Still early stage, with proof of concept work underway.
- Critical success factors:
- User experience must match card/wallet journeys (QR seen as suboptimal)
- Instant authorisation at POS is essential
- Strong consumer protections (refunds, disputes) required
- Key challenges:
- Low consumer incentive to switch from cards
- Fragmented experiences → need for standardisation and branding
- Infrastructure dependency:
- Future Faster Payments upgrades
- Concept introduced:
- “National kernel” to enable multiple payment types via one terminal environment
Next steps:
- Continue proof of concept development through 2026.
- Retailers to:
- Share requirements and use cases
- Engage in industry collaboration
- Monitor:
- Regulatory developments
- Industry standards and branding initiatives
- Further updates to follow on A2A progress and ecosystem development.
- Share positions on A2A and other topics to support alignment.
5. Online PIN & Future Payment Infrastructure
What was discussed:
- Role of online PIN and terminal evolution in supporting future payment methods.
Key points:
- Online PIN could support:
- SoftPOS and queue-busting use cases
- Real-time risk decisioning
- However, limited industry appetite due to:
- Cost vs benefit concerns
- Shift toward wallets and A2A
- Broader focus on enabling infrastructure:
- Potential terminal middleware (“national kernel”) to support multiple payment types
Next steps:
- Further investigation into industry appetite for online PIN.
- Continued exploration of future-ready terminal architecture.
The next Finance Community call will take place online at 10.30am on the 28th May. Do email me if you would like to join but haven't received an invite. An agenda will be shared in advance.
