Reclaiming the Crown: Can the UK Lead the Global Payments Revolution Again?

The UK’s status as a global powerhouse for cross-border payments has undeniably diminished in recent years, though it remains a significant player.

Several factors have contributed to this decline, including Brexit, increased regulatory burdens, competition from emerging financial hubs, and the rise of new payment technologies.

How Did the UK Lose Its Way?

• Brexit’s Impact on Payment Firms

One of the most tangible setbacks for the UK in cross-border payments was the loss of EU passporting rights after Brexit. Before 2021, UK-based payment service providers (PSPs) could seamlessly offer services across the EU under a single regulatory framework. However, after Brexit, firms like Wise (formerly TransferWise), Revolut, and Checkout.com had to establish EU-based subsidiaries to continue operating in the region. Wise, for example, moved its European headquarters to Brussels, while Revolut secured a Lithuanian banking licence to retain access to EU markets. These firms shifted jobs, operations, and regulatory oversight to the EU, reducing London's role as a central hub for cross-border payments.

• The UK’s Exclusion from SEPA Instant Payments

The Single Euro Payments Area (SEPA) provides low-cost, fast euro transactions across the EU and select non-EU countries like Norway, Switzerland, and Iceland. However, while the UK remains a SEPA participant, UK-based financial institutions face higher costs and longer processing times for SEPA transactions compared to before Brexit. UK banks also lack access to SEPA Instant Payments, meaning that euro transactions from the UK are not as competitive in speed and cost as those from EU-based banks. UK firms dealing in euro payments—such as exporters, fintechs, and PSPs—now operate at a disadvantage compared to their EU counterparts.

• Failure to Modernise Faster Payments for Global Use

The UK pioneered Faster Payments (FPS) in 2008, but it has lagged behind other jurisdictions in linking real-time payments internationally. By contrast, the EU launched TARGET Instant Payment Settlement (TIPS), which enables instant euro transfers between banks across Europe. Meanwhile, Singapore, India, and Brazil have successfully connected their real-time payment systems to cross-border frameworks, making instant global payments possible. The UK has not yet developed similar connectivity. UK-based firms struggle with slow and costly cross-border transactions, while rival hubs like Singapore facilitate instant, seamless payments with multiple countries.

• Declining Foreign Investment in UK Fintech & Payments

Investment in UK fintech has been slowing since 2021. In 2023, UK fintech funding fell 65% year-on-year, dropping behind the US and EU. While part of this is due to the global tech downturn, the lack of regulatory clarity post-Brexit and uncertainty over the UK’s future financial regulations have made it less attractive for investors. For example, Stripe, a major US-based payments firm, has prioritised investment in Dublin over London for its European expansion. Similarly, PayPal has focused more on its EU business than its UK operations post-Brexit. The UK is losing its status as the go-to location for fintech expansion, meaning fewer jobs, innovations, and global payment flows through London.

• Regulatory Uncertainty & Fragmentation

Post-Brexit, the UK has struggled to balance divergence from EU rules with the need to maintain market access. The Edinburgh Reforms aimed to make UK financial regulations more competitive, but the financial industry remains concerned about uncertainty over regulatory changes, particularly in payments, crypto, and financial crime compliance. The UK’s approach to stablecoin regulation has lagged behind the EU’s Markets in Crypto-Assets (MiCA) framework, which provides clear rules for cross-border crypto payments. Without equivalent clarity, UK-based crypto firms like Blockchain.com and Luno have looked towards EU licensing instead. The UK risks becoming a regulatory island, where firms prefer EU, US, or Singaporean jurisdictions with clearer, more predictable frameworks.

Is the UK Too Isolationist?

The perception of UK financial services as isolated post-Brexit is a concern. While the UK has signed new trade agreements and financial memorandums of understanding (such as with the EU and Switzerland), it has yet to regain its previous status as a seamless hub for international payments. The absence of an EU-equivalent regulatory passport has created barriers for firms looking to process payments efficiently across borders.

Moreover, the UK government has prioritised domestic regulation and financial reforms (such as the Edinburgh Reforms) but has not fully integrated these into a broader international payments strategy. Without closer alignment with global initiatives like ISO 20022 adoption, cross-border digital currency frameworks, and new trade agreements, the UK risks being sidelined in the evolving payments ecosystem.

So, What Can the UK Do to Get Back in the Payments Game?

The UK’s decline in cross-border payments is not irreversible, but regaining its status as a global powerhouse requires bold reforms. A strategic approach focusing on regulatory alignment, financial innovation, and global integration can restore London’s position at the heart of international transactions. By taking decisive action in key areas, the UK can make itself an attractive destination for payment providers, fintech firms, and global investors once again.

• Enhance Global Payment Connectivity

One of the UK’s biggest disadvantages post-Brexit is its reduced integration with international real-time payment networks. To compete with hubs like Singapore and the EU, the UK must connect its FPS with global systems. A model to follow is Singapore’s PayNow-UPI linkage, which allows instant, low-cost transactions between Singapore and India. The UK should seek similar partnerships with the EU (SEPA Instant), the US (FedNow), and Asian markets to ensure seamless cross-border payments. By forging direct connections with global instant payment networks, UK businesses and consumers will benefit from faster and cheaper transactions. This will also make London a more attractive base for fintech companies focused on international payments.

• Strengthen the UK’s Role in Euro Transactions

Brexit has left UK payment firms at a disadvantage when dealing in euros. While the UK remains part of SEPA , it does not have full access to SEPA Instant Payments, meaning transactions take longer and cost more than those processed within the EU. The government must negotiate a UK-EU Instant Payments Agreement, allowing UK-based firms to process euro transactions at the same speed and cost as their European counterparts. This move would particularly benefit businesses that trade heavily with the EU, such as e-commerce platforms, exporters, and financial service providers. Additionally, re-establishing seamless euro payments would make London a more viable hub for international fintech firms operating in both sterling and euros.

• Align Regulations & Offer Strategic Incentives

Regulatory complexity and uncertainty have deterred international payment firms from prioritising the UK. To reverse this, the government should pursue regulatory mutual recognition agreements with the EU, US, and Asia. This would allow financial firms operating in the UK to comply with a single, harmonised framework rather than navigating separate compliance requirements for each jurisdiction. Alongside regulatory alignment, targeted incentives should be introduced to attract fintech and payments firms back to London. This could include tax incentives for cross-border payment providers, regulatory fast-tracking for firms relocating to the UK, and grants for companies developing next-generation payment technologies.

• Boost Fintech & Payments Innovation

The UK has long been a leader in fintech, but to maintain its edge, it must actively support the development of new technologies. Establishing a UK Payments Innovation Fund, based on the EU model, could provide financial backing for companies developing real-time payments infrastructure, blockchain-based settlement solutions, and AI-driven fraud detection systems. Additionally, the UK should expand its regulatory sandbox programmes, allowing fintech startups to test new cross-border payment solutions under real-world conditions with temporary regulatory exemptions. The Financial Conduct Authority (FCA) has successfully operated such sandboxes in the past, and broadening their scope to cover AI-driven compliance and central bank digital currencies (CBDCs) would further enhance the UK’s competitiveness.

• Secure a UK-EU Financial Services Agreement

One of the most pressing barriers to the UK’s payments sector is its lack of a comprehensive financial services agreement with the EU. Currently, UK-based firms must establish separate European operations to serve EU customers, increasing operational costs and regulatory complexity. The UK should negotiate a financial services treaty with the EU, focused on:

• Mutual recognition of UK and EU financial regulations to reduce compliance burdens.

• Simplified licensing processes for UK-based fintechs expanding into the EU.

• A dedicated UK-EU fintech partnership, similar to Singapore’s 2022 Fintech Bridge agreement, which facilitate joint projects and regulatory cooperation.

Such an agreement would restore London’s role as a gateway between Europe and global financial markets, making it more attractive for payment providers and investment.

• Leverage AML & Financial Crime Compliance as a Competitive Edge

The UK has a strong reputation for financial crime prevention, and it should capitalise on this by positioning itself as the safest jurisdiction for cross-border payments. This can be achieved by investing in automated, AI-driven transaction monitoring to detect fraud and money laundering in real-time. Additionally, the UK could lead global efforts in payment security by establishing a task force on cross-border payment fraud, working alongside the Financial Action Task Force (FATF) and other international regulatory bodies. By setting the global standard for secure payments, the UK can attract financial firms that prioritise compliance and security.

• Attract Back Major Payment Players Like Stripe and PayPal

Since Brexit, several global payment firms have prioritised expansion in Dublin, Amsterdam, and Luxembourg over London due to regulatory uncertainty. To reverse this trend, the UK should create a Global Payments Hub in London, offering:

• Preferential licensing and tax benefits for companies processing international transactions from the UK.

• Regulatory fast-tracking for fintech firms relocating their European operations back to London.

By making London the easiest and most cost-effective place to run a payments business, major firms like Stripe, PayPal, and Adyen would have strong incentives to expand their UK operations rather than favouring European competitors.

Final Thoughts

The UK may have lost ground in cross-border payments, but it’s far from out of the game. With the right strategy, it can reclaim its position as a global payments powerhouse. By integrating with international payment networks, securing a forward-thinking financial services deal with the EU, and doubling down on fintech innovation, the UK can re-establish itself as a dynamic hub for global transactions. The key lies in bold investment, regulatory clarity, and proactive collaboration.

Rather than allowing regulatory isolation to erode its competitiveness, the UK must position itself as a leader in secure, efficient, and innovative payments infrastructure. With the right strategy, London can once again be the gateway for global transactions—driving growth, attracting investment, and securing its place at the forefront of the global payments revolution.