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30 July 2026

Polar Moment’s Payments Perspective: July 2026

Payments news from July 2026: The ongoing development of the digital pound, HM Treasury propose a major overhaul of UK payments regulation, BNPL regulation comes into force and the ECB experiences another outage.

The Digital Pound remains under active development

The Bank of England is still in the design phase. Although it has established a Digital Pound laboratory for testing and experimentation, commitment to launching it is still awaited. A launch would require legislation and probably isn’t a priority for Andy Burnham’s new regime.

Read more: https://www.bankofengland.co.uk/the-digital-pound (opens in a new tab)

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Major UK Payments Regulation Overhaul

HM Treasury launched proposals for a substantial modernisation of UK payments regulation on 14 July 2026. The main objectives are:

  1. To replace the current prescriptive legislative framework with a more agile model led by the Financial Conduct Authority (FCA).
  2. To accommodate tokenised payment services and consider what framework should be used to manage agentic artificial intelligence (AI).
  3. To establish a long-term regulatory and commercial framework for Open Banking.

This is not just regulatory housekeeping. It signals that the UK is redesigning payments regulation around:

  • APIs,
  • digital assets,
  • AI-driven commerce,
  • and tokenisation.

The consultation period ends on 6th October.

Find out more: https://www.skadden.com/insights/publications/2026/07/hm-treasury-proposes-major-overhaul (opens in a new tab)

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Buy Now Pay Later Regulation in the UK Begins

New regulation came into force on 15 July 2026, bringing many BNPL products under FCA regulation for the first time. Providers are now:

  • Required to be FCA-authorised, unless operating under temporary permission.
  • Subject to FCA rules and supervision, including its Consumer Duty requirements.

This is the biggest structural change to the UK BNPL market since the sector emerged.

Affordability checks are mandatory

Lenders must conduct proportionate affordability assessments before allowing customers to use BNPL products. Previously, many providers relied largely on soft credit checks and lighter underwriting processes

Stronger consumer protection

Customers must now receive:

  • Clearer information about repayment obligations.
  • Better disclosure of consequences for missed payments.
  • Support for customers experiencing financial difficulty.
  • Access to free debt-advice signposting where appropriate.

Access to complaints and redress

Consumers can now escalate eligible complaints to the Financial Ombudsman Service (FOS) if disputes with BNPL providers cannot be resolved directly.

Find out more: https://www.fca.org.uk/firms/regulating-buy-now-pay-later (opens in a new tab)

A computer with a blue screen on it

ECB Experiences Another Payment Infrastructure Outage

The European Central Bank reported a second software-related disruption to its T2 wholesale payment system within a week.

The outage lasted only about 40 minutes. However, it highlighted the operational challenges of maintaining payment infrastructure that settles trillions of euros each day.

Find out more: https://www.globalbankingandfinance.com/ecbs-t2-payment-system-back-up-brief-incident-impacting/ (opens in a new tab)