Compliance Crystal Ball 2026: Turning Regulatory Pressure in Retail Payments into Competitive Advantage

2026 is poised to reshape banking compliance as technological innovation, a relentless wave of regulatory change, and new financial models intersect. In this landscape, AI will accelerate risk detection while Open Banking and crypto introduce both transparency and fresh challenges. This year, the sheer pace and complexity of the regulatory agenda have reached a tipping point, with overlapping timelines and multi-layered requirements demanding unprecedented operational agility.

In this blog, Michelle Curtin, Risk & Compliance Consultant, shares her future-facing insights on how 2026 marks the year compliance shifts from a back-office burden to a competitive edge, where proactive regulatory alignment becomes the new foundation for consumer trust and retail innovation - as part of Vixio’s Compliance Crystal Ball 2026.

Navigating the 2026 Regulatory Congestion

As regulators tighten oversight of payments, 2026 will be the year compliance becomes a true differentiator in retail. From safeguarding to embedded finance, the new wave of regulatory change will transform the payments landscape - not just for financial institutions, but for every retailer operating in the digital economy.

The Safeguarding Overhaul: Beyond a Back-Office Function

The FCA’s updated safeguarding requirements, due to take effect in May 2026, represent the most significant shift since PSD2. Firms holding customer balances will need daily fund checks, monthly reports and annual audits. For retailers with stored- value or in-app wallet functions, these changes will raise operational standards but also offer a new way to communicate trust to consumers: you money is protected as securely as a bank’s.

Empowering the Merchant: Protection Against "De-banking"

Regulatory reform is also extending into contract fairness. Under new UK rules, PSPs will need to give merchants 90 days’ notice and written reasons before terminating payment contracts. This addresses long-standing industry frustration over sudden “de-banking” decisions, enabling retailers to plan continuity and protect customer experience.

At the same time, Buy Now Pay Later (BNPL) and embedded finance will come under closer scrutiny, with new consumer-duty-aligned rules requiring clearer communication and affordability checks. Retailers will need to re-evaluate their partnerships and ensure compliance extends across their entire payment ecosystem - from acquirer to checkout.

Data Integrity: The New Standard for Onboarding

Although the safeguarding reforms do not directly amend KYC or AML obligations, they will intensify the need for strong data integrity. Firms must be able to link every safeguarded pound to a verified customer, reconciling accounts daily and maintaining full traceability. Weak or incomplete customer-identification processes will expose firms to both safeguarding and regulatory risk. In practice, this means tougher onboarding standards, fewer anonymous products and a more transparent flow of funds across the retail payments chain.

A Unified Vision: Harmonising Regulation and Innovation

Looking ahead, the proposed merger of the PSR into the FCA and the development of the UK’s National Payments Vision suggest a more unified, innovation-friendly approach to regulation. For agile retailers, this is a chance to align compliance strategy with product innovation - to build systems that are both compliant and customer-centric from day one.

The takeaway is clear: staying ahead of regulatory change will require dynamic, data-driven intelligence. The retailers and payment firms that anticipate new rules, rather than react to them, will be best placed to turn compliance into competitive advantage. 2026 will test every player in the retail payments chain - but it will also reward those who recognise that compliance is no longer a back-office function. It’s the foundation of consumer trust, innovation and growth.

Curious to hear more?

Dive into the Vixio Compliance Crystal Ball to see the bigger picture for 2026, and unveil more predictions and ideas from some of the industry’s sharpest minds.