The rulebook that governs how every UK payment provider operates is being rewritten. On 14 July 2026, HM Treasury published its Modernising Payment Services Regulation consultation, proposing the most significant restructuring of the regime since the Payment Services Regulations 2017 and the Electronic Money Regulations 2011 came into force. The consultation closes on 6 October 2026. Most merchants will never read the 100-plus pages, and nor should they have to. But the direction it sets will shape what payment acceptance looks like, and costs, for the rest of the decade.

What is actually being proposed

Three big moves sit at the heart of the consultation, according to analysis published this week by Skadden. First, most of the detailed, technical requirements that currently sit in legislation would move into the FCA Handbook, leaving only the regulatory perimeter, key definitions and core consumer protections in statute. Second, the framework would become technology neutral, so the same payment permissions could apply whether a payment moves as ordinary bank money, a tokenised deposit or a UK-regulated stablecoin. Third, open banking would get a consolidated, FCA-supervised framework of its own, including a statutory access right for variable recurring payments and, more controversially, the possibility of banks charging for certain premium access services.

This lands alongside the government's confirmed plan to fold the Payment Systems Regulator into the FCA, which we covered earlier this year. Taken together, the UK is moving from a patchwork of regulators and prescriptive legislation to a single, FCA-led regime that can change faster.

Why an FCA-led rulebook matters to merchants

A more agile regime cuts both ways. Rules that live in the FCA Handbook can be updated in months rather than waiting years for Parliament, which means protections against fraud and safeguarding failures can keep pace with technology. It also means the rules your payment provider operates under will change more often. Merchants will feel that indirectly: in onboarding checks, in how strong customer authentication is applied at checkout, and in how quickly new payment methods become available. Working with an FCA-regulated provider that treats compliance as a core competence, rather than an afterthought, becomes more valuable, not less, in a regime built on supervisory judgement.

The parts worth watching

For UK SMEs and ecommerce businesses, a few strands of the consultation deserve particular attention over the next year:

  • Variable recurring payments: a statutory access right would let customers approve a mandate once and pay by bank transfer within agreed limits after that. For subscriptions, memberships and repeat billing, this is a credible long-term alternative to card-on-file, with no interchange in the traditional sense.
  • Charging for open banking access: if banks can charge for premium access services, the economics of Pay by Bank could shift. The assumption that account-to-account payments will always dramatically undercut card processing fees deserves a question mark until the pricing rules are settled.
  • Agentic AI payments: the consultation asks how consent, authentication and liability should work when an AI agent initiates payments on a customer's behalf. Nothing is decided, but checkout flows built for one-customer-one-click will need rethinking as this matures.
  • Stablecoins in the payments perimeter: UK-issued qualifying stablecoins could be used within regulated payment services. This is a slow burn for the average merchant, but it signals where the infrastructure is heading.

What to do this week, and what to leave alone

There is no action a merchant must take before October. The sensible steps are modest: if payments are a material cost line for your business, consider responding to the consultation, since merchant voices are consistently underrepresented in these exercises. Review how long your current acceptance contract runs and whether it penalises you for adding new payment methods, because flexibility is the cheapest hedge against a fast-changing regime. And benchmark what you actually pay today, so you can tell whether future changes help or hurt you.

Monek is an FCA-regulated UK payment gateway (FRN 920628) and we follow this regulatory agenda so our merchants do not have to. Our toolkit already covers the practical ground: card processing from 0.99% blended, next-day settlement, Virtual Terminal and Pay by Link for remote orders, a free WooCommerce payment gateway plugin and native Xero integration. If the pace of regulatory change has you wondering whether your current setup still fits, our team will run a no-obligation rate comparison and talk you through it in plain English.