Agentic payments: consent and liability under UK payment law
In short: agentic payments create uncertainty about how payer consent, strong customer authentication and liability apply when an autonomous agent initiates a transaction. HM Treasury’s Financial Services AI Adoption Plan and Modernising Payment Services Regulation consultation ask whether the PSRs 2017 need to change. The consultation closes on 6 October 2026.
A customer may authorise software to choose when to pay, how much and to whom within agreed limits. UK payment law provides starting points for that arrangement, but it does not resolve every question. The Payment Services Regulations 2017 recognise a transaction initiated on behalf of a payer and allow consent to cover a transaction or a series. The uncertainty begins when the agent acts outside its instructions, is manipulated or uses an authentication route that was designed for a different payment model.
HM Treasury published the Financial Services AI Adoption Plan and its Modernising Payment Services Regulation consultation on 14 July 2026. Recommendation 10 of the plan asks government, regulators and industry to develop an agentic payments trust framework. The plan otherwise keeps AI within the existing regulatory framework, in line with the FCA’s approach in the FCA AI approach and the AI Lab; its Mills Review found that accountability does not shift as AI takes on more of the work. The consultation asks whether the existing consent, authentication and unauthorised-transaction liability provisions need updating.
Key findings on agentic payments
- The Financial Services AI Adoption Plan makes ten recommendations across five themes. Recommendation 10, on agentic payment readiness, is rated high priority. Source: HM Treasury, 14 July 2026.
- Recommendation 10 proposes work on legal and liability frameworks, Know Your Agent protocols, and authentication and governance standards. Source: Financial Services AI Adoption Plan.
- The PSRs 2017 define a payment transaction to include one initiated on behalf of the payer. Regulation 67 permits payer consent to one transaction or a series. Sources: regulation 2 and regulation 67.
- The consultation asks whether authentication, consent and liability rules need to adapt for agentic payments. It does not state that the existing rules have ceased to apply. Source: consultation, question 15.
- The consultation closes at 11:59pm on 6 October 2026. Source: HM Treasury consultation page.
| Issue | Current position | Question for agentic payments |
|---|---|---|
| Consent | Regulation 67 requires the payer’s consent to a transaction or a series, using the agreed form and procedure. | Does the consent cover the transaction selected by the agent, and what happens when the agent exceeds its instructions? |
| Authentication | Regulation 100 requires strong customer authentication in specified circumstances. Dynamic linking applies to remote electronic payment transactions and the requirements are subject to exemptions. | How should a payment service provider authenticate a machine-initiated instruction and bind it to the payer? |
| Liability | Regulations 76 and 77 allocate losses from unauthorised transactions between the provider and payer, subject to stated exceptions. | Was the transaction authorised, and how should responsibility be allocated among the payer, provider and agent supplier? |
The PSRs provide a starting point
The PSRs 2017 do not require every payer to be an individual. A payer is a person who holds a payment account and initiates, or consents to the initiation of, a payment order, or who gives a payment order where there is no account. A payment transaction may be initiated by or on behalf of that payer. An AI system is therefore not required to become the statutory payer before it can initiate an instruction on someone’s behalf.
Regulation 67 answers the payment-authorisation question, not every question of agency or liability. The payer must consent to the transaction or a series of which it forms part, in the agreed form and procedure. An agentic payment may fall within a sufficiently defined delegation. The difficult cases concern instructions outside its scope, ambiguous parameters and evidence of what the payer authorised.
Regulation 100 requires strong customer authentication when a payment service user accesses an account online, initiates an electronic payment or takes a remote action carrying fraud risk. Dynamic linking to a specific amount and payee applies to remote electronic payment transactions. The rule is subject to exemptions in the applicable technical standards. It does not say that a human must approve every transaction, but machine-to-machine authentication raises questions about how the user’s authority is verified and recorded.
For unauthorised transactions, regulation 77 can make the payer liable for up to £35 in specified lost, stolen or misappropriated-instrument cases, or for all losses following fraud or an intentional or grossly negligent breach of regulation 72. Other protections and exceptions apply. Whether an agent’s payment is unauthorised must be decided before those rules allocate loss. Contract, agency law and scheme rules may then affect recourse among the firms involved.
The Treasury has opened the policy question
The consultation says the PSRs were written before AI and may not fully facilitate agentic payments. It asks how payment services regulation should adapt, including whether the provisions on authentication, consent and liability need updating. That is an open consultation question, not a conclusion that the current law has no application. The government’s present route is to consider these issues through payment-services reform; the final legal approach has not been decided. That reform runs alongside the transfer of the Payment Systems Regulator’s functions to the FCA, set out in the Financial Services and Markets Bill 2026, and work on the next generation of payments infrastructure described in product level arrangements.
Recommendation 4 addresses a separate resilience issue. The Critical Third Parties regime under section 312L of FSMA allows HM Treasury to designate a provider whose failure could threaten the stability of, or confidence in, the UK financial system. The plan asks government and regulators to assess key AI and cloud providers under that regime. Designation could impose resilience oversight, but it would not determine agentic payments liability between a customer and payment service provider.
Practical questions for payment firms
An agent-initiated payment arrangement turns on three things: the identity of the payer, the identity of the autonomous agent, and the scope of the authority connecting them. The product terms and technical records are where those are recorded: the permitted payees, amounts and timing; the agreed consent procedure; how authority is withdrawn; the authentication route; and the treatment of instructions outside those limits. A Know Your Agent standard could support identity and revocation, but no UK regulatory KYA standard has yet settled those legal questions.
Viewpoint
I read the Treasury documents as asking two related but separate questions. The first is whether the payer authorised the transaction under regulation 67. The second is how loss and recourse should be allocated if an autonomous agent exceeds or misuses that authority. Identity and governance standards can provide evidence, but they cannot decide either question by themselves.
Agentic payments liability will determine whether a provider can price and control the risk of a new payment flow. The legal effect of the delegation should therefore be settled alongside the operational standards, with each rule identifying whose act counts as the payment instruction and who bears loss when the instruction falls outside authority.
Frequently asked questions
What are agentic payments?
Agentic payments are transactions initiated by an autonomous agent acting on a customer’s behalf. The customer sets an objective or parameters, while the software may select the payee, amount or timing. The legal question is whether the resulting instruction falls within the payer’s consent and agreed payment procedure.
Do the Payment Services Regulations 2017 cover agentic payments?
The PSRs 2017 provide relevant rules on payer consent, authentication and unauthorised transactions. They also recognise payment transactions initiated on behalf of a payer. Their application to autonomous decision-making is uncertain in some cases, which is why the Treasury consultation asks whether those provisions need updating.
What is Know Your Agent?
Know Your Agent is the plan’s proposed identity and verification workstream for autonomous software agents. It could help a provider bind an agent to the customer it represents and revoke that authority. It would supplement customer due diligence rather than replace it, and would not itself decide consent or liability.
When does the consultation close?
HM Treasury’s Modernising Payment Services Regulation consultation closes at 11:59pm on 6 October 2026. Question 15 asks specifically how existing regulation should adapt for agentic payments, including whether the consent, authentication and unauthorised-transaction liability provisions need updating.
For advice on agent-initiated payments, safeguarding or scheme arrangements, see payments product, safeguarding and scheme governance, contact Rob Bratby, or use the Bratby Law contact page.
