Regulation Roadmap Q3
July 16, 2026
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TPA’s Q3 UK Payments Regulation Roadmap explains the key UK and international regulatory developments affecting payment firms over the coming years.
9 June 2025
by Payments Intelligence
What is this article about?
RT2, the UK’s new real time gross settlement service, and its transformative impact on the payments ecosystem.
Why is it important?
It enhances resilience, broadens access, improves interoperability, and enables innovation, thereby modernising the UK’s financial infrastructure.
What’s next?
Payment providers to strategically invest in ISO 20022 implementation, API integration, and service innovation to fully leverage RT2’s capabilities.
The launch of RT2, the renewed Real Time Gross Settlement (RTGS) service, on 28 April 2025 marks a significant milestone for the UK’s payments infrastructure. According to the Bank of England, RTGS settles approximately £500 billion between banks each day—around a quarter of the UK’s annual GDP—in sterling central bank money. The latest updates deliver capabilities far beyond those of the legacy system, creating new opportunities to revolutionise services, reduce risk, expand market reach, and drive innovation.
RT2 offers four key advancements: enhanced resilience, expanded access, wider interoperability, and improved functionality. These position the UK payments sector for continued evolution in a rapidly changing global financial landscape.
While the previous RTGS system served the UK market effectively for many years, it had become increasingly constrained by fast-moving developments in payment technology, shifting user expectations, and emerging cyber threats. RT2 now provides a future-proof platform to support the ongoing transformation of the UK payments ecosystem.
As a strategic enabler for the entire payments value chain, RT2 opens the door to new business models and competitive advantages. Understanding its capabilities—and how they surpass those of its predecessor—is essential for organisations seeking to remain competitive in this evolving market.
RT2 reimagines resilience by introducing a secure zone that isolates critical settlement functions, creating multiple layers of defence against threats. Where the previous RTGS operated as a single system requiring complex restart procedures for recovery, RT2 introduces significant architectural improvements. The new system features a component-based design, allowing for the isolated recovery of specific data. Its service-oriented architecture enables independent scaling, while the separation of settlement logic from communication layers creates a more modular structure.
These changes enable quicker recovery with reduced downtime, allowing payment providers to commit to more stringent uptime guarantees. The overall redesign represents a substantive shift in how settlement systems approach resilience and security in the modern financial landscape.
One of RT2’s key resilience features is its trusted independent data store, which serves as a high-integrity reference for continuous data verification. This architecture strengthens the system’s ability to detect and recover from cyber threats and operational incidents.
The previous RTGS operated as a closed system, mainly limited to traditional banks. RT2 is substantially expanding direct participation. This represents a strategic shift for payment providers, affecting cost structures, risk exposure and increasing competition.
A critical limitation of the previous RTGS was its technical ceiling on participant numbers. RT2 reduces this constraint, enabling scaling to higher numbers without performance degradation. This creates an opportunity to reconsider strategic positioning, potentially eliminating dependencies on competitor institutions for settlement access.
RT2 introduces a sophisticated, proportionate risk-based model that tailors requirements to the actual risk exposure presented by different institutions. Smaller payment providers face appropriately scaled requirements rather than the full compliance burden designed for major institutions. This proportional approach makes direct participation viable for a broader range of organisations.
Expanded access fundamentally changes competitive dynamics. Non-bank payment service providers can now compete more directly with traditional banks by offering services with similar settlement finality and risk profiles. This democratisation of settlement access could create a more level playing field in the payments ecosystem, potentially spurring innovation and new service models previously constrained by access limitations.
RT2 implements ISO 20022 as its native messaging standard, unlocking enhanced interoperability and richer data capabilities across both domestic and international payment flows. The enriched data model supports advanced sanctions screening, more effective anti-money laundering controls, and the development of data-driven payment services.
RT2 also fundamentally transforms international payments by establishing harmonised messaging standards with major global settlement systems. Its interoperability with other national RTGS platforms — combined with the technical capability for potential synchronised settlement — creates opportunities to offer more competitive cross-border services with improved speed, transparency, and cost efficiency.
The adoption of common messaging standards and enhanced interoperability lays the groundwork for greater resilience, including potential future capabilities to route transactions through alternative channels without compromising data integrity or reconciliation processes.
RT2 enables substantial enrichment of payment data, including:
These improvements support the development of new value-added services based on significantly improved information flows.
In addition, the implementation of Legal Entity Identifiers (LEIs) within RT2 offers further opportunities to:
This enables more sophisticated risk management and contributes to a more secure financial ecosystem, while helping to reduce administrative burdens.
Algorithms implemented in RT2 considerably improve settlement efficiency by optimising how payment obligations are matched and settled. This algorithmic approach reduces the effective cost of settlement and allows participating institutions to manage liquidity requirements more effectively, enhancing overall operational efficiency.
RT2’s architecture is also designed to support extended operating hours. The transition to near-continuous settlement will be driven by industry demand and coordinated implementation across participants. This staged approach ensures that expanded hours can be introduced in alignment with market readiness, allowing participants to adapt their systems appropriately.
Another key advancement is the implementation of APIs for payment and liquidity data access, which represents a fundamental shift from the previous batch-oriented model. The API-driven approach enables:
RT2 fundamentally reshapes competitive dynamics by removing barriers that previously protected incumbent positions. Direct access for non-bank providers, enhanced functionality and API driven integration create opportunities for new entrants and innovative models, democratising access to central bank settlement services.
Capturing RT2 benefits requires strategic investment in ISO 20022 implementation beyond minimum compliance and API integration to leverage real-time data capabilities. Additionally, organisations must focus on product development that exploits enhanced functionality and process redesign for streamlined operations to maximise returns on these investments.
New value proposition opportunities include enhanced cross-border offerings, data-rich payment services, and near 24/7 availability models. These also represent significant possibilities for innovation and market differentiation in a more competitive landscape.
RT2’s enhanced data capabilities create opportunities to streamline regulatory compliance processes and reduce costs, transforming compliance from a pure cost centre to a competitive advantage. The structured data approach enables more efficient monitoring and reporting, creating opportunities for sophisticated compliance management with reduced manual intervention.
RT2 establishes a modernised platform to drive the next phase of innovation and competitiveness within the UK payments ecosystem. The key question is not whether to adapt, but how quickly to embrace the capabilities it enables. Those who understand and leverage what RT2 makes possible will find themselves advantaged in an increasingly competitive payments landscape.
RT2’s true value lies in the foundation it creates for continual evolution of the payments ecosystem by establishing modular architecture, enhanced access models, comprehensive interoperability and improved functionality.
The strategy is clear: understand deeply what RT2 enables that RTGS did not, and build capabilities to capture these opportunities ahead of competitors.
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