In March 2026, the UK’s Payment Systems Regulator (PSR) published its Annual Plan and Budget for 2026/27, setting out how it will oversee the payments ecosystem during a period of significant change.
This is both a delivery year—where existing reforms begin to take effect—and a transition point, as the PSR moves toward consolidation into the Financial Conduct Authority (FCA).
For retailers, the key thing to note is that payment costs, fraud rules, and payment choices are all set to evolve over the next 12–24 months and beyond.
Delivery Meets Transition
The PSR continues to focus on:
- Competition
- Innovation
- Protecting users of payment systems
The emphasis is on implementation rather than new policy design. At the same time, regulatory structure is shifting:
- PSR functions are being aligned with the FCA
- Legislation is expected by 2026–2027
- A single, integrated regulator is likely from 2027 onwards
Key Priorities — and What Comes Next
Card Fees
The PSR is continuing its work on:
- Cross-border interchange fees
- Scheme and processing fees
These have increased in recent years, raising concerns about weak competition and costs. Consultations are expected to move to firm regulatory decisions this year with remedies likely to take effect within 12–24 months
These could potentially lower payment acceptance costs, provide greater visibility of fee structures an dan opportunity to renegotiate acquiring arrangements
Open Banking and Account-to-Account Payments
The PSR is helping design a long-term regulatory and governance framework, including a future entity to oversee open banking. We can expect a transition from policy development to commercial scaling, an expansion of account-to-account (A2A) payments an the development of services such as variable recurring payments (VRPs)
This could mean more low-cost alternatives to cards and faster, smoother checkout experiences
Payments Infrastructure and the National Payments Vision
Working with the Bank of England and HM Treasury, the PSR is supporting long-term infrastructure reform. We can expect gradual delivery of faster, more resilient payment systems, continued coordination through national programmes but incremental improvements rather than a single major overhaul
These could lead to improved payment speed and reliability and better support for digital and omnichannel retail
Supervision, Enforcement and Regulatory Reform
The PSR will align more closely with the Financial Conduct Authority, to strengthen supervision and enforcement. Legislative consolidation of the PSR into the FCA is expected 2026–2027, providing single-regulator oversight and a greater focus on consumer outcomes and system-wide risks.
This could lead to more consistent but potentially broader regulatory expectations, increased influence of FCA frameworks (e.g. Consumer Duty) and indirect compliance requirements via payment providers
As part of continuous, overlapping reform beyond 2026/27, retailers should expect continued change across:
- Open banking expansion
- Fraud liability evolution
- New payment capabilities (e.g. VRPs)
- Potential innovations such as a digital pound