The Bank of England has said it will aim to overhaul the UK's interbank payment system by 2020 to create a new service that is "resilient but flexible".
Future users will pay for the revamp of the "next generation" Real-Time Gross Settlement (RTGS) service through a temporary increase in charges, the bank's executive director Andrew Hauser said this morning.
A timetable for delivery of the new service will be published next year.
Bank of England governor Mark Carney indicated in June that an updated version might use blockchain technology - the distributed ledger system that underpins bitcoin.
"The world of payments is changing rapidly, and central banks need to keep pace if we are to deliver our mission of monetary and financial stability effectively in the years to come, whilst also enabling innovation and competition where we can," Hauser said as the bank launched a consultation document on the system.
Taken together with prospective reforms to retail payments underway in the industry, these changes are designed to keep the UK payments infrastructure at the leading edge globally whilst underscoring our commitment to maintaining stability and confidence.
In October 2014, the RTGS system fell foul of a technical glitch and was temporarily suspended.
RTGS channels payments through its Clearing House Automated Payment System (CHAPS), which was set up in 1984.
All payment forms from ATM cash withdrawals to interbank paying became more transparent last year, when the Payment Systems Regulator came into force.
It has three principles - to be open and cooperative with regulators; to be compliant; to manage business and financial risks so as not to jeopardise the smooth running of the system – and three objectives - to promote competition, to promote innovation and to ensure systems are developed and operated in the interests of service users.
Mark Carney faces tough questions: See what the BoE governor had to say when grilled by schoolchildren on live TV