Payment matters - October 2025

Payment sector on the horizon: What do I need to know?

• Global
• Asia
• Europe
• Middle East
• UK
• US

Global

1. Bankers Association pushes for payment system reform

On September 23, 2025, the Bankers Association for Finance and Trade (BAFT) published a paper supporting the G20’s plan to improve global payments and resilience.

The paper outlines G20-led goals for better cross-border payments, digital innovation, climate resilience, and collaboration. It aims to help banks, regulators and payment providers work together more effectively.

Impact: It would be prudent for businesses to check their performance against the G20’s metrics and align where gaps are identified. Investments in digital innovation and climate resilience could help reduce cost and enhance customer satisfaction in the long term.

2. New FATF standards to fight money laundering and terrorist financing

On June 22, 2025, the Financial Action Task Force (FATF) released updated guidance on financial inclusion and anti-money laundering (AML) and counter-terrorist financing (CTF) measures.

The guidance reflects changes to FATF Recommendations, promoting financial inclusion through proportionate risk approaches. It supports access to formal financial services for underserved groups and offers tools like tiered due diligence, AI risk monitoring, and digital identity systems, even in medium-risk areas. It includes best practices for regulated entities and aims to reduce unintended consequences of AML/CTF rules.

Impact: FATF guidance is non-binding but aims to help businesses with the interpretation of, and compliance with, global standards. Incorporating suggested measures can help businesses avoid unintended exclusion and reputational risk. At the same time, they must be cautious of data privacy risks attached.

Asia

3. Japan/EU: Cooperation agreement on fair digital markets

On 23 July 2025, the Japan Fair Trade Commission signed a Cooperation Arrangement with the European Commission.

The agreement supports the Digital Markets Act and Japan’s Mobile Software Competition Act. It aims to promote contestability, competition, and fairness in digital markets through international collaboration.

This arrangement enables expert dialogues, staff training, and sharing of non-confidential implementation practices. It is signed in the context of the EU-Japan Digital Partnership.

Impact:  EU-Japan cooperation on digital markets may boost regulatory alignment and global oversight, including app stores, mobile payment systems and online financial services.

4. Singapore: New initiatives and tools launched for AI and data protection

On July 7, 2025, the Infocomm Media Development Authority (IMDA) launched three initiatives to support trusted AI and data use. These are (i) an expanded Global AI Assurance Sandbox, (ii) a Privacy Enhancing Technologies (PETs) adoption guide, and (iii) a new national Data Protection Standard.

Impact: Businesses demonstrating accountable data protection practices can now apply to be certified under the new DPTM. Thereby they can increase consumer confidence in their tools’ trustworthiness and security. The Sandbox provides a safe testing environment for AI tools. This is helpful, where AI is used to detect fraud, assess credit risk, and monitor suspicious transactions.

Contributing feedback on the PETs guide is encouraged to help refine it in a workable manner.

5. Hong Kong: New supplemental circular to clarify the scope of permitted virtual asset-related activities

On 30 September 2025, the Hong Kong Monetary Authority (“HKMA”) and Securities and Futures Commission (“SFC”) issued a joint circular (“Supplemental Circular”) to supplement and amend the “Joint Circular on intermediaries’ virtual-asset related activities” dated 22 December 2023 (“First Circular”).

The Supplemental Circular introduced refinements and relaxations to the requirements for SFC-regulated intermediaries engaging in certain virtual asset-related activities. Specifically: (i) SFC-regulated intermediaries may now provide staking services to their clients (subject to compliance with the relevant requirements in the Supplemental Circular) and execute trades via the off-platform virtual asset trading services of SFC-licensed platforms; (ii) a client’s subscription and redemption of investment products using virtual assets or in-kind subscriptions or redemptions of virtual asset funds will not be treated as virtual asset dealing services; and (iii) intermediaries are not required to make the relevant risk disclosure statements when distributing virtual assets to institutional professional investors and qualified corporate professional investors.

Impact: SFC-regulated intermediaries should consider the relaxations under the Supplemental Circular and notify the SFC or HKMA of any changes relating to their virtual asset-related activities.

Europe

6. EU: Digital Euro innovation may reshape business payments

On 26 September 2025, the ECB published its report on the digital euro innovation platform. Two workstreams, visionaries and pioneers, explored ideas and tested conditional payments. Visionaries proposed e-receipts, smart wallets, and inclusive features. Pioneers confirmed technical feasibility through simulations.

Impact: The digital euro innovation platform can be seen as an incentive to encourage new payment solutions and improving transaction efficiency. It aims to support the development of smart contracts and programmable money, which could streamline operations. Businesses coud benefit from enhanced transparency and automation in financial processes.

7. EU: Payment service provider and Member State compliance report

On 11 September 2025, the Commission published their latest compliance report.

Key findings include:

• Most payment service providers comply with the transparency and information rules.
• Since 2016, about 17.6 million payment accounts have been switched, with 2.5 million switches in 2023 alone. Rejection rates of switching requests vary significantly across states.
• Banks are required to offer ‘basic feature accounts’ and nearly 2 million of these were opened in 2023. Rejection rates for these accounts remains low at around 1.2 %.
• The report notes data gaps, national differences and proposes continued monitoring and potential further action.

Impact: Businesses offering payment accounts may need to adjust their terms to ensure transparency. Some may also face extra costs to upgrade systems to comply with comparison website obligations or basic feature account rules.

8. EU: New capital rules set framework for crypto risk management

On August 17, 2025, the European Banking Authority (EBA) published draft rules for banks on managing crypto asset exposures under CRR III.

The rules address credit, market, counterparty, and valuation risks related to crypto assets. They remove the “prudent valuation” requirement from previous standards. Banks must report long and short crypto positions more clearly and consistently. This reflects the EU’s aim to integrate digital assets into traditional financial services.

A temporary regime for prudential treatment of crypto assets allows banks time to adjust risk and compliance systems.

Impact: The temporary regime gives businesses time to adapt, but it is recommended they launch measures to align swiftly. Banks will need to take into account increased compliance costs.

9. EU: European Commission publishes report on cash control

On 23 July 2025, the European Commission (EC) published its first report on the Cash Control Regulation. The Regulation aims to curb money laundering by requiring declarations for cash movements of €10,000 or more at the EU’s external borders.

Key findings include:

• Over 310,000 declarations and 23,000 infractions were recorded between 2021 and 2024. Out of these unaccompanied cash disclosures totalled 6,532, with 102 infractions noted.
• Most Member States found the system effective, though technical and administrative hurdles remain.
• No evidence was found to justify expanding the definition of “cash” to include prepaid cards or luxury goods.
• Penalties vary widely: some countries apply administrative fines; others impose criminal sanctions.
• Areas for improvement include harmonised penalties, better reporting and broader access to CIS+ Cash module by financial intelligence units.

Impact: Businesses can maintain current procedures for cross-border cash declarations without adjusting to new thresholds or definitions.

Middle East

10 Kuwait: New phase in capital market development

On July 12, 2025, the Capital Markets Authority (CMA) of Kuwait launched the second phase of its Market Development Project. It introduces major infrastructure changes to enhance market efficiency, transparency and regulatory enhancements. A key milestone is licensing Kuwait Clearing Company as the first Central Counterparty. Ten brokerage firms were upgraded to ‘Qualified Broker’ status. New systems for bonds, sukuks, and ETF indices were tested.

The CMA emphasized continued development and collaboration with key financial institutions.

The initiative supports the country's vision to become a regional financial hub and attract global investment.

Impact: Businesses are recommended to monitor licensing and operational requirements in relation to Central Counterparty and Qualified Broker models. They should also ensure technical compatibility with the new systems.

11. Oman: New regulatory framework for promising companies

On 10 August 2025, the Financial Services Authority (FSA) issued a decision to regulate the Alternative Investment Market (AIM). This follows a Royal Decree, creating the ‘Promising Companies Market’ within the Muscat Stock Exchange.

Trading is limited to qualified investors. Listed companies must follow simplified financial disclosure rules. Founders face share sale restrictions post-listing. The regulation supports Oman’s Capital Market Incentive Programme and aligns with national goals to diversify the economy.

Impact: Businesses interested in listing could take advantage of the new arrangements. The regulations could provide new access to capital with potentially fewer regulatory burdens. Company founders using the new framework should plan for restricted share sales post-listing.

UK

12. UK: Live pilot for tokenised sterling begins

On September 26, 2025, UK Finance launched a live pilot for tokenised sterling deposits. These digital deposits mirror traditional bank money but are meant to offer faster payments and better fraud protection. This ties in with the broader initiative to modernise payments and support government goals for digital finance.

The pilot builds on earlier work by the Regulated Liability Network and will run until mid-2026.

UK Finance will host events and engagement sessions during the pilot to update stakeholders on progress and future plans.

Impact: Businesses should consider how tokenised deposits could streamline operations. Benefits may include faster settlements, reduced fraud, and improved transparency.

13. UK: Bank of England expands CHAPS data rules for 2027

On 23 September 2025, the Bank of England (BoE) confirmed new ISO 20022 data rules for CHAPS payments starting November 2027.

All CHAPS payments must include Purpose Codes, improving clarity and fraud prevention. Legal Entity Identifiers (LEIs) and structured remittance data will also be required in specific payment types.

Impact: Businesses should prepare systems to include Purpose Codes in all CHAPS payments by November 2027. Firms must ensure customer interfaces support clear code selection.

14. UK: FCA sets out changes to payment safeguarding rules

On August 7, 2025, the FCA published a policy statement. This confirms final rules to strengthen how payment and e-money firms protect customer funds. The rules follow an earlier consultation and is meant to respond to systemic weaknesses uncovered in past firm failures. Proportionality measures include exempting firms with under £100,000 in customer funds from mandatory audits.

The FCA will provide guidance during the nine-month implementation period. The new rules will take effect from May 7, 2026. See our briefing for more information.

Impact: Businesses should begin preparations for the new safeguarding regime well ahead of the start date. This includes reviewing current safeguarding arrangements, updating internal policies, and ensuring systems can support daily reconciliations and monthly reporting. They should assess whether they meet the audit exemption threshold and, if not, engage qualified auditors early.

15 UK: New rules for Buy Now Pay Later

On 18 July 2025, the FCA announced new rules for Buy Now Pay Later (BNPL) credit agreements. This move follows the UK Government’s decision to bring BNPL under FCA oversight. The rules cover agreements provided by third-party lenders, with some exemptions (e.g. for insurance premium financing and social landlord arrangements). Firms must either be authorised or enter a temporary permissions regime (TPR) to continue operating from date of entry into force. Enforcement starts on July 15, 2026.

The announcement was updated on 29 September.

Impact: Any BNPL lender who enters into a BNPL agreement will need to:

• Be authorised for the relevant consumer credit activities or have a temporary permission under the BNPL TPR.
• Comply with the FCA rules.
• Firms not holding consumer credit permissions can enter a TPR to continue operating while awaiting FCA authorisation review. If the firm chooses not to enter the regime, it must stop all regulated BNPL activities. It may still service pre-existing agreements.

US

16. US: Administration unveils digital asset regulation blueprint

On July 30, 2025, the US Administration released a comprehensive report on digital asset regulation and innovation. The report classifies digital assets, assigns SEC and CFTC roles, and supports banking reforms for custody and tokenization services. It promotes dollar-backed stablecoins and opposes central bank digital currencies (CBDCs). It also proposes tax simplification for staking, mining, and small crypto transactions. The aim is to foster innovation while protecting consumers and national security.

Impact: Businesses are encouraged to reassess asset classifications, engage with partners on tokenization, and align stablecoin strategies with the report’s recommendations. They should avoid CBDC reliance and strengthen anti-money laundering systems to meet evolving compliance standards.

Co-authored by Jonathan Botham, Westley Trimble, Paola Paccani and Uendi Barreti

Further resources:

• UK Changes to safeguarding regime for payments and e-money firms
• Pay transparency and pay equity update - implementation of the EU Directive on the way
• EU Pay Transparency Directive: Snapshot update
• Financial Services Regulatory Calendar 2025 | Eversheds Sutherland
• UK Retail Finance Horizon Scanner - June 2025