Digital pound would not require new POS systems – Bank of England

Existing point-of-sale terminals in the UK could be used to initiate digital pound payments, according to research from the Bank of England.

As part of the design phase for a digital pound, the Bank of England (the Bank) is conducting experiments and proofs of concept (PoC) in collaboration with private-sector innovators and a range of stakeholders. These aim to assess the technical feasibility and technology and policy implications of potential digital pound design features. No decision has been taken on whether or not to build a digital pound.

The purpose of this experiment was to assess the technical feasibility of using existing point-of-sale (POS) hardware, as currently used in the UK, to initiate digital pound payments. This involved a PoC that used EMV standards to send payment instructions from smart cards to POS devices, and then to an application programming interface (the ‘BoE API’).

While the Bank did not build a digital pound infrastructure, and no real money payments were made, the experiment demonstrated the following from a technology perspective:

. Existing POS terminals in the UK could, in principle, be used to initiate digital pound payments.

. Those terminals do not appear to require modification in order to make digital pound payments.

The experiment also concluded that it is technically feasible to implement offline payments functionality at points of sale using existing POS terminals. But this functionality might require that an offline payments application be deployed to those terminals in order to store offline balances. Therefore, while existing POS terminals may not need to be modified to make online digital pound payments, they might need to be modified for offline payments.

There are several other factors, such as operational, legal and commercial considerations, that will impact design choices around digital pound payments at points of sale. Those factors were not tested in this experiment.

More details here: Point-of-sale proof of concept – Digital pound experiment report

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Background

In February 2023, the Bank published a Technology Working Paper, which accompanied the Bank and HM Treasury’s joint Consultation Paper on the digital pound. The Bank and HM Treasury confirmed in January 2024 that further preparatory work was justified to enable us to respond to developments in the payments landscape and to reduce materially the lead time if there is a future decision to introduce a digital pound. The Bank and HM Treasury have therefore moved from the research and exploration phase of work on a digital pound to the design phase, which will result in a decision around the middle of the decade on whether to build a digital pound.