On 15 January 2026, the High Court ruled that the Payment Systems Regulator (PSR) is within its rights to impose a price cap on cross-border interchange fees, finding in favour of the regulator against Revolut, Visa and Mastercard.

The parties sought to challenge the regulator's 2023 proposal to cap interchange fees following its finding that such fees had risen by a factor of five after Brexit.

The level of the cap and implementation date are yet to be decided, the PSR having delayed the decision until resolution of the judicial process.

On 19 December 2025, the FCA published a press release confirming that it had finalised changes to introduce greater flexibility in how payment service providers (PSPs) set contactless payment limits. The reforms follow the FCA’s consultation earlier this year (CP25/24) and are implemented through FCA Instrument 2025/62, made on 18 December.

The amendments remove the existing regulatory limits under the SCA‑RTS and introduce a new risk‑based exemption, giving banks and other PSPs discretion to determine their own approach to contactless payments. The FCA emphasises that firms should consider enabling customers to set their own personal limits or disable contactless functionality entirely, reflecting practices already adopted by several high street banks. Existing protections, including reimbursement for unauthorised transactions, continue to apply. The FCA expects that increased flexibility will encourage improvements in fraud controls and strengthen consumer confidence.

The FCA also published Handbook Notice No.136, summarising consultation feedback and highlighting three key changes to the initial proposals:

• Delayed implementation: The effective date is pushed back by three months to 19 March 2026, allowing firms more time to transition and to prepare customer communications.
• Vulnerable customers: The FCA has strengthened guidance in its Payment Services and E‑Money Approach Document to highlight the need to consider customers with characteristics of vulnerability, alongside compliance with the Consumer Duty and existing guidance on fair treatment.
• Consumer‑set personal limits: The FCA has reinforced that PSPs should consider enabling customer‑defined limits and must communicate clearly when such options are available.

The rule change takes effect from 19 March 2026. Adoption of the new flexibility is optional, but firms choosing to implement it must proactively communicate changes in line with Consumer Duty expectations.

On 19 December 2025, the Council of the EU announced that it had agreed its negotiating mandate on two key legislative proposals: the introduction of a digital euro and clarifying the legal tender status of euro banknotes and coins. The Council's position will form the basis for upcoming negotiations with the European Parliament once the Parliament has adopted its own mandate.

The Council confirmed that the proposed digital euro would be issued by the European Central Bank and would function as a complement to, rather than a replacement for, cash. According to the Council's announcement, the agreed text aims to ensure strong privacy safeguards, offline usability, and measures to avoid financial stability risks, including limits on digital euro holdings.

Alongside this, the Council has agreed its position on strengthening the legal tender framework for cash, with the objective of ensuring that consumers retain effective access to cash and the ability to use it for payments. The proposal sets out requirements to ensure accessibility and acceptance of cash across the euro area, while allowing targeted exemptions in justified cases.

The announcement states that the Council's agreed positions mark the next step in the legislative process, enabling negotiations with the European Parliament in 2026. Formal adoption will follow once both institutions reach agreement on the final text.

On 22 December 2025, it was announced that India and New Zealand had concluded negotiations on a new Free Trade Agreement (FTA). Among other things, the FTA introduces two core measures aimed at strengthening cooperation on digital payments infrastructure and financial technology innovation.

Firstly, both countries have committed to collaborate on electronic payments and real‑time transaction infrastructure, including supporting domestic payments interoperability and enabling real‑time cross‑border remittances and merchant payments through integrated Fast Payment Systems. This is intended to strengthen India's digital payments ecosystem by improving remittance flows, creating new market access opportunities for Indian payment service providers and drawing on India's established technological frameworks such as UPI and NPCI.

Secondly, the agreement includes dedicated measures on financial technology and regulatory innovation. India and New Zealand have agreed to enhance cooperation on financial services innovation, including mutual learning between their respective Regulatory Sandbox and Digital Sandbox frameworks for cross‑border applications. These provisions are designed to facilitate regulatory knowledge‑sharing, support India's ongoing sandbox initiatives and create opportunities for collaboration between Indian fintech firms and their New Zealand counterparts.

Negotiations were concluded in nine months, marking a significant step towards deeper economic engagement. Formal signing is expected in 2026.

On 19 December 2025, the Federal Reserve published a Request for Information and Comment on a proposed “Payment Account” that eligible financial institutions could use for the limited purpose of clearing and settling their own payment activity. The Federal Reserve explains that this proposal responds to recent developments in the payments landscape and aims to support innovation while maintaining a safe and efficient payment system.

According to the Request for Information and Comment, a Payment Account would be distinct from a master account and subject to risk‑mitigating limitations designed to reduce potential exposure for Reserve Banks and the wider payment system. These limitations include:

• No access to credit, including no discount window availability;
• No interest paid on account balances;
• A cap on end‑of‑day balances, potentially set at the lesser of USD 500 million or 10% of the account holder’s total assets; and
• A strict prohibition on overdrafts, with any transaction that would create an overdraft automatically rejected.

The Federal Reserve emphasises that the prototype does not expand or change legal eligibility for accounts or services. Only institutions already legally eligible for a Federal Reserve Bank account under the Federal Reserve Act would be eligible to request a Payment Account. The account would be used exclusively for the institution’s own payment flows, and not for correspondent banking or settling payments on behalf of third parties.

The Federal Reserve states that comments will be accepted for 45 days following publication in the Federal Register.

On 5 January 2026, it was reported that Bangladesh Bank (BB) has issued a circular mandating comprehensive monthly reporting for all licensed Mobile Financial Services, Payment Service Providers, Payment System Operators, and Utility Service providers. The new requirements aim to enhance transparency and oversight of Bangladesh's payment systems.

Under the regulations, institutions must submit detailed daily data on trust and settlement account balances, investments, funds in transit, e-money, and merchant liabilities. Reports must be filed with BB by the tenth day of the following month, using the prescribed template. BB has emphasised that institutions are solely responsible for timely and accurate reporting and non-compliance or inaccurate submissions are subject to penalties.

The circular is effective immediately.

On 22 December 2025, it was announced that the House of Representatives of the Philippines unanimously approved on a third and final reading a bill to amend the Bank Secrecy Law. The measure, House Bill 6707, aims to combat tax evasion, money laundering, and other financial crimes, and to align the Philippines with international standards on financial transparency.

The bill allows the Bangko Sentral ng Pilipinas (BSP) to examine bank deposits under strict and limited conditions, specifically when there is reasonable suspicion of unlawful activity or in the course of investigating closed banks. The reforms are designed to remove barriers to the effective investigation and prosecution of corrupt or illegal financial actions by stockholders, owners, directors, trustees, officers, or employees of BSP-supervised institutions.

Key features include:

• The BSP may inquire into or examine deposits when there is reasonable ground to believe that fraud, serious irregularity, or unlawful activity has been committed.
• The results of such examinations are limited in use to the BSP, the Securities and Exchange Commission, the Philippine Deposit Insurance Corporation, the Anti-Money Laundering Council, the Department of Justice, and the courts.
• The bill provides a safe harbour clause exempting banks and their personnel from liability for acts done in compliance with an official order of inquiry or examination.
• The definition of “deposits” is clarified to include all obligations of a bank that form part of its deposit liabilities under BSP rules.

The bill will proceed to the Senate for further deliberation before it can be enacted into law.

On 17 December 2025, the Australian Treasury published an independent review and public consultation on the Enhanced Regulatory Sandbox, responding to concerns about low uptake and limited scope. The Enhanced Regulatory Sandbox, introduced in 2020 and overseen by the Australian Securities and Investments Commission, was designed to allow businesses to test innovative financial services and credit activities without the need for a full licence. However, feedback from industry stakeholders has highlighted challenges with eligibility, the range of permitted activities, and the duration of exemptions.

The government is now seeking input on proposals to broaden the types of financial services and products eligible for sandbox testing, streamline application processes, and improve support for startups and smaller firms. The review will also consider how the sandbox can be better aligned with upcoming federal regulatory reforms and Australia's broader digital asset roadmap.

The review will deliver recommendations to the government by mid-May 2026. Interested parties are invited to submit feedback by 6 February 2026, with further consultations planned in early 2026. 

On 23 December 2025, it was reported that Indonesia's Financial Services Authority (OJK) had finalised a new regulatory framework for the Buy Now, Pay Later (BNPL) sector under the Financial Services Authority Regulation Number 32 of 2025 on the Provision of Buy Now Pay Later (BNPL) Services. The Regulation requires BNPL providers to obtain an operating licence from the OJK and introduces stricter standards for risk management, consumer protection, and data security.

The new framework is intended to address rapid growth and emerging risks in the BNPL market. Further details are expected once the OJK publishes the official Regulation.

On 16 December 2025, the FCA (as lead regulator for open banking) and the Payment Systems Regulator (PSR) published a report and related FCA news story providing an update on the development and rollout of variable recurring payments (VRPs), which now account for 16% of all open banking transactions. API performance statistics for open banking were also published, showing a 53% year-on-year growth in open banking payments overall. Some key points are as follows:

• With industry, the FCA/PSR have supported work to extend VRPs to greater commercial use, as part of the calls from the National Payments Vision (NPV) to develop a strong and competitive open banking market in the UK, and quickly roll out VRP to ‘phase 1’ use cases (including utility payments, financial services payments, and payments to local and central government).
• The UK Payments Initiative (UKPI) – a new company formed by 31 firms to enable VRPs - will operate a commercial VRP (cVRP) scheme, enabling consumers to make flexible, recurring payments to businesses such as utility providers. These services are already helping customers with irregular incomes to manage payment schedules more effectively. This scheme will enable a larger group of customers and businesses to access these services.
• The first live payments under the UKPI scheme are expected in Q1 2026, signalling the start of a new era for payments and open banking in the UK.
• Over 2026, the FCA/PSR will continue to support industry in the rollout of VRPs.
• HM Treasury is expected to introduce legislation in 2026 that will grant the FCA new powers to set open banking rules, and the FCA plans to consult on new rules for the long-term regulatory framework before the end of 2026. As part of that work, the FCA will continue to liaise with the CMA and government to ensure the long-term regulatory framework provides clarity on commercial models for open banking payments. The framework will be the foundation for expanding cVRPs into e-commerce and wider use cases. It will let industry drive open banking forward, and unlock the potential for new use cases that contribute to innovation and competition. The FCA will factor in the lessons learned from the Phase 1 cVRPs rollout.

Annex A to the report contains 15 guiding principles for target state for the open banking market, developed and agreed by industry representatives. They include that:

• Some level of brand / Trustmark / nomenclature standardisation and consistency is a critical prerequisite for open banking payments to become a ubiquitous method with high market adoption;
• Open banking decisions today should set the foundations for open finance – reducing burden on investment, duplication of effort, data sharing extensibility and interoperability where possible; and
• The FCA should have oversight of open banking participants and schemes and set guardrails for industry.

On 8 January 2026 UK Finance, supported by Deloitte, published a report presenting an industry-led proposal for a sustainable commercial model for Open Banking Payments (OBPs) in e-commerce – also referred to as Wave 2 cVRPs. UK Finance explains that UKPI is expected to use this proposal to inform its decisions on the Wave 2 cVRP commercial model, and the content of the report will be open to any other operator or stakeholder who could benefit from the analysis.

On 16 January 2026, the FCA published a letter (dated 19 December 2025) addressed to trade associations setting out its proposed next steps for the development of a future entity for UK open banking. The future entity will be the primary standard-setting body for open banking APIs in the UK.

The FCA's next step following its August 2025 feedback statement on the design of the future entity is to establish the future entity. It asks industry participants to engage with organisations interested in the role of future entity and to decide which option they believe should lead the next phase of work. It would prefer firms to agree on a single proposal and invites market participants to express their views no later than 30 January 2026.

To help with the decision process, the FCA will commission an independent consultant-led assessment of the proposals, or of the single supported proposal if industry agrees on a single potential body. As it will be the regulator of the future entity, the FCA will also provide its view on the suitability of any proposal. The FCA expects this process to begin in February 2026 and that a formal decision will be made on which organisation becomes the future entity at a later date.

In addition, the FCA will convene a short programme of roundtables to enable firms to share views and new information. It is also inviting those bodies interested in leading the establishment of the future entity to contact it directly to arrange a one-hour Q&A session ahead of the launch of the independent consultancy process.

On 20 January 2026, the FCA and the Payment Systems Regulator (PSR) published a joint prioritisation statement on enforcement in relation to commercial variable recurring payments (cVRPs) as part of their open banking work.

In a letter to the Competition and Markets Authority (CMA) dated 15 January 2026, the FCA and the PSR explain that they have been engaging with the UK Payments Initiative (UKPI), the new organisation created to own and operate a multilateral framework for cVRPs. UKPI is currently developing a centralised "access fee" pricing model for cVRPs.

The joint prioritisation statement confirms that the FCA and PSR will not, at this stage, prioritise investigations under Chapter I of the Competition Act 1998 (CA 1998) in relation to specific pricing arrangements concerning UKPI's cVRP scheme. Given the government's National Payments Vision and forthcoming legislative framework, the FCA and PSR do not consider that prioritisation of a Chapter 1 CA 1998 investigation into these arrangements would currently be warranted.

In a letter dated 16 January 2026, the CMA confirmed to the FCA and PSR that it does not intend to take a different position on the prioritisation of these investigations.

The prioritisation statement is a temporary measure pending the government's anticipated legislative framework under the Data (Use and Access) Act 2025 or other relevant legislative mechanism. The statement applies until the earlier of that framework being in place or July 2027.

In the meantime, the FCA and the PSR will continue to monitor market developments and review any changes to the pricing methodology. They expect UKPI to share its final governance documentation with them as soon as it is approved and they may reconsider their non-prioritisation position if the conditions set out in the statement and its annex are not appropriately reflected.

The annex to the statement sets out full details of the pricing arrangements covered by the statement, including relevant conditions and safeguards.

On 16 December 2025, the final report of HM Treasury's independent review of the Payment and Electronic Money Institution Insolvency Regulations 2021 was published.

The report identifies several key issues with the Payment and Electronic Money Special Administration Regime (PESAR), in particular the absence of a clear hierarchy among the three statutory objectives, creating uncertainty over priorities. It highlights:

• significant delays in returning funds to customers;
• gaps in consumer protection (given the lack of anything equivalent to the Financial Services Compensation Scheme (FSCS)); and
• the requirement for court entry and court approval of distribution plans causing unnecessary delays and additional costs.

The report recommends targeted reforms rather than an overhaul of the PESAR. These include:

• prioritising business rescue and customer transfers above the other PESAR statutory objectives, where appropriate;
• an out-of-court route into special administration;
• alternatives to court approval of distribution plans;
• FSCS-style protection for customers; and
• contingency planning for the insolvency of large-scale failures, with a focus on cross-border recognition of PESAR appointments.

The government is considering the review's recommendations.

On 19 December 2025, the Payment Systems Regulator (PSR) launched a consultation on proposed directions relating to remedies to address the issues it identified during its market review of card scheme and processing fees. This follows an earlier consultation on potential remedies in April 2025.

The PSR has decided to implement remedies relating to information, transparency and complexity and to pricing governance and is now consulting on the detailed form of the directions it plans to make. It has published two draft specific directions to Mastercard and Visa on measures to improve information transparency of scheme and processing fees charged to acquirers and on pricing governance. In addition, the PSR has decided to introduce a remedy relating to regulatory financial reporting and expects to consult on a draft direction for this by 31 March 2026.

The consultation closes on 13 February 2026.

On 18 December 2025, the EBA published a memorandum of understanding (MoU) that it has agreed with the European Central Bank (ECB), national central banks (NCBs) and national supervisory authorities (NSAs) in the EEA on the co-operation framework for information sharing in support of the access of non-bank payment service providers (PSPs) to central bank operated payment systems. A related EBA press release has also been published.

On 15 December 2025, the EBA and the ECB published their 2025 joint report on payment fraud, assessing fraud levels and authentication trends across the European Economic Area (EEA) and evaluating the continued effectiveness of strong customer authentication (SCA) introduced under PSD2.

Covering semi‑annual data from 2022 to 2024, the report reviews fraud patterns across major payment instruments, including credit transfers, card payments, direct debits, cash withdrawals and e‑money transactions. It notes that SCA remains highly effective for mitigating the forms of fraud it was designed to address — particularly card‑payment fraud — and has contributed to maintaining an overall EEA fraud rate of approximately 0.002% of total transaction value. Nonetheless, total fraud losses rose from EUR 3.5 billion in 2023 to EUR 4.2 billion in 2024, driven by shifts in fraudster behaviour and growing cross‑border exposures.

Among the key findings were the following points:

• Although SCA‑authenticated transactions were significantly less susceptible to fraud, card‑payment fraud was 17 times higher when the payee was located outside the EEA where SCA does not apply, underscoring persistent vulnerabilities in cross‑border transactions.
• Fraudsters increasingly rely on manipulation‑based techniques, such as tricking users into authorising fraudulent transactions, and exploit SCA exemptions, particularly in credit transfers, where losses reached EUR 2.2 billion in 2024 (a 16% year‑on‑year increase).

The report emphasises that while PSD2’s SCA requirements remain effective for their intended purpose, supervisors, payment service providers and market participants must adapt controls to address emerging fraud risks. It encourages continued enhancement of fraud‑monitoring capabilities, closer scrutiny of SCA‑exempt transactions and greater coordination across the EEA to counter increasingly sophisticated fraud schemes.