This design note outlines the Bank’s emerging thinking on an alias service for a potential digital pound. It forms part of the design phase and contributes to the development of a blueprint that will inform a future decision on whether to proceed with any digital pound. This note is exploratory and does not represent final policy or design decisions.
Design notes
The Bank of England (the Bank) and HM Treasury are committed to our work on a digital pound being informed by dialogue with the public, business, and civil society.
To support this engagement, the Bank is publishing design notes, which set out the Bank’s emerging thinking on specific topics related to a digital pound. These notes explore matters we are considering during the design phase for a digital pound, on which we wish to give stakeholders visibility of our emerging thinking. Publishing design notes allows us to be transparent about our work on a digital pound, and to prompt discussion on specific topics with stakeholders at an early stage and in an exploratory manner.
The Bank is closely involved in ongoing work on the National Payments Vision, including through the Retail Payments Infrastructure Board. This design note is not intended to pre-judge any outcomes that may emerge out of this wider work.
Design notes do not represent final policy or design decisions, nor do they represent policy proposals upon which we are formally consulting. On completion of the design phase and taking account of evolutions in the wider payments landscape, the Bank and the Government will decide whether to proceed to build a digital pound. If the decision was taken to build a digital pound, it would only be introduced once Parliament had passed the relevant primary legislation.
As is the case with all our work during the design phase, no decision has yet been taken on whether to build a digital pound.
Context
In the digital pound Technology Working Paper, we said that digital pound accounts, accessed by end-users through Payment Interface Providers (PIPs), could be identified using aliases. These digital pound account aliases would be provided via an alias service, and could enhance end-user functionality (eg by making it easier to share account information) and aid interoperability with other payment systems. As a next step, we said we would investigate how to support the necessary types of aliases to ensure that the CBDC system has flexibility and privacy.
In July, we published a design note on the digital pound product strategy. The note set out a staged approach to enabling intermediaries to deliver an attractive digital pound product proposition to end-users. Digital pound account aliases were highlighted as a potential source of product differentiation for end-users during the Initial stage.
This note explores account aliases in more detail, including how they can improve the retail payment experience, the key functionality any digital pound alias service would need to provide, and the potential role the Bank could take, as operator of the core digital pound infrastructure, in enabling such a service.
The benefits of aliases in retail payments
An alias can be broadly defined as an alternative identifier used in place of a primary one. Aliases can serve various purposes, such as simplifying communication or enhancing privacy, and have been used in digital systems for decades. A common use of aliases is email redirection, where an alternative email address can be used that redirects messages to a linked inbox, allowing the primary email address to remain concealed.
Aliases are playing an increasingly prominent role in account-to-account (A2A) payment innovation globally. When used as alternative identifiers for digital money accounts, aliases can improve the convenience, privacy and security of retail payments, while also supporting interoperability between different payment schemes and jurisdictions.
How aliases can be used in A2A payments
A digital money account, such as a bank account, will have an identifier assigned to it when created, which can be accessed and shared by the account owner. In the UK, this identifier is typically an eight-digit account number, which when combined with a six-digit sort code, can be used to route an A2A payment to the correct account.footnote [1] Account identifiers like this can be hard to remember, cumbersome to communicate and prone to input error, negatively affecting the experience of making and receiving A2A payments.
Aliases can be linked to underlying account information and shared in place of the originally issued identifier. Account aliases can take many forms, with a commonly used example being the account owner’s mobile number. Compared with an account number and sort code, a mobile number is more memorable and likely already known to other payment participants. Different aliases can be linked to the same account concurrently, providing a range of benefits to the account owner (eg a random three-word combination as an account alias could be easy to remember but more private than a mobile number).footnote [2]
The benefits of account aliases in A2A payment systems globally are often introduced with peer-to-peer (P2P) payments,footnote [3] enabling a more seamless and secure way to send and request money from others. These benefits can then be extended to consumer-to-business payments online and in-store, where account aliases can help to make A2A payments a viable alternative option in these environments. For example, e-commerce purchases can just require customers to enter an account alias in the online checkout, then confirm the payment through their banking app. For in-person payments, a small business owner could quickly and securely send a request-to-pay to a customer’s account alias, or share their business account alias verbally or in written form.
Account aliases can also benefit cross-border payments. Internationally recognised identifiers, such as an IBAN or mobile number (including country code), can be used to improve the experience of making payments between different payment schemes and jurisdictions, and lay the groundwork for more direct interlinking in the future. This application of account aliases also applies to supporting interoperability between domestic payment schemes, helping users make payments across multiple schemes and interchange their funds between different forms of money used domestically.
Case study – Bizum
Bizum, a Spanish payment service provider, allows its users to link their mobile number to their bank account for use as an alias. The service was launched for P2P payments in 2016, with the participation of approximately 20 banks. Since then, the service has been expanded to accommodate e-commerce and in-store payments.
Working with similar payment service providers in other euro-area countries, Bizum participates in the European Payment Alliance (EuroPA) initiative. EuroPA leverages the use of mobile numbers as account aliases by each of the participating service providers, using existing infrastructure to enable P2P transfers between different jurisdictions that only require a mobile number for initiation.footnote [4]
In Spain, ‘make me a Bizum’ is a common expression, reflecting the popularity of the payment service. In addition to the convenience of using a mobile number as an account alias, the success of Bizum can be attributed to strong buy-in from Spanish banks at launch, and a consistent user experience within each banking app, resulting in strong brand recognition and user confidence.
Innovation opportunity in the UK
In the UK, account aliases are not available for A2A payments involving different account providers (eg banks, e-money institutions, etc).footnote [5]
It is possible with some banks and e-money institutions to link an alias to your account. However, these aliases can only be recognised by other users of the same account provider.footnote [6] For example, Revolut allows UK customers to assign a ‘revtag’ to their account, which is a username that can be shared with other Revolut users in place of an account number and sort code. Monzo offers a similar type of alias called ‘monzo.me’. A Revolut user cannot initiate a payment to someone’s monzo.me alias, and a Monzo user will not be able to input a revtag alias when initiating a payment.
An opportunity exists in the UK to improve retail payments with account aliases. As potential new A2A payment infrastructure, a digital pound could introduce this functionality to individual and business end-users in the UK.
Case study – Paym
Paym was a P2P payment service launched in the UK in 2014, allowing users to send and receive money using their mobile number as an account alias. It was initially supported by 15 major banks and building societies in the UK, and accessible within banking apps.
Unlike Bizum, which offers the same core service of mobile number account aliases, Paym was not widely promoted, nor consistently positioned and structured across different banking apps, particularly with respect to branding and customer journey. This resulted in low product awareness and an inconsistent user experience, ultimately leading to the closure of Paym in 2023 due to low and declining transaction volumes, and slowing adoption.
The growing popularity of account aliases in payments globally provides good reason to consider how a similar service in the UK might improve retail payments for individuals and businesses. It will be important for whoever provides any such service to apply lessons from Paym and other payment services globally like Bizum, in particular on the importance of strong product awareness and a consistent user experience.
A digital pound alias service
Any digital pound would be delivered to end-users via a public-private platform model. Intermediaries, including PIPs, would provide user-facing services. End-users of the digital pound would have accounts with PIPs, through which they could manage their digital pound holdings and make and receive payments. For each end-user account, PIPs would create an underlying account identifier. A digital pound alias service would enable the underlying account identifiers to have aliases linked to them, which end-users could manage and share with others for payments, regardless of whether they use the same PIP or not.
The benefits of digital pound account aliases
Building on what was set out in the Technology Working Paper,footnote [7] and considering the benefits aliases are providing in retail payments globally, account aliases could be beneficial to digital pound end-users through three key channels:
- Convenience: Individuals and businesses could have the option to use aliases that do not require knowledge of the PIP providing the account, such as pre-existing identifiers (eg a mobile number or business URL). This could make sharing digital pound account information with others more seamless, and reduce the time and effort required to send and request payments. It could also improve the experience of switching account provider (PIP), as the same alias could be relinked to a different (new) account.
- Privacy and security: The use of digital pound account aliases would mean end-users would not need to share, or even access, the underlying account identifiers used by their PIPs. Aliases could be anonymous, temporary, and one-directional to help protect end-users’ personal data and their exposure to bad actors. Any aliases that are compromised could be deactivated without the PIP having to replace the underlying account.
- Interoperability: Aliases that are supported by other payment systems in the UK and abroad could be linked with digital pound accounts, helping support interoperability between the digital pound and other forms of money, both domestic and foreign.
Characteristics and attributes of digital pound account aliases
Mobile numbers are a popular choice of account alias for A2A payment systems globally. As aliases, mobile numbers can be considered independent, meaning they do not include reference to the account provider (eg a specific bank or, for a digital pound account, a PIP). The need to reference an account provider or not is one of several characteristics digital pound account aliases could have, each with attributes supporting at least one of the key benefits described above.
Table A: Characteristics and attributes of digital pound account aliases
Characteristic | Attribute | Description | Example formats |
|---|---|---|---|
Routing | Independent | Alias that does not reference the account provider (PIP). |
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PIP-bound | Alias that contains reference to the account provider (PIP). |
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Anonymity | Anonymous | The content of the alias does not directly reveal any personal data. The alias cannot be derived from known personal data, or vice versa. |
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Discoverable | The content of the alias could directly reveal, or be used to reveal, personal data. |
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Lifespan | Permanent | The alias can be used until deactivated by the end-user or PIP, with no defined lifespan. |
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Temporary | The alias has a defined lifespan upon creation, after which it is no longer usable. The lifespan could be usage or time-based. |
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Creation | Pre-existing | The alias pre-existed as an identifier for the end-user. |
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Newly created | The alias has been created for the account. |
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Direction | Multi-directional | Payments can be sent to the alias, and requested from the alias. |
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One-directional | Payments can only be sent to the alias. It is not possible to send a request for payment to the alias, preventing ‘spam’ requests. |
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Required functions of a digital pound alias service
The core purpose of an alias service is to ensure a payment instruction or request is routed to the correct account. The operator of a digital pound alias service would be required to map each alias to the PIP providing the account in a data repository, keep the repository up to date, and ensure the mappings in the repository are easily accessible to PIPs. This functionality is essential to enable the use of independent aliases, as PIPs will require a means by which to identify the other PIP(s) involved in a digital pound transaction. The below figure illustrates how an alias service would be utilised by PIPs when an independent alias is used in a payment, with the operator of the alias service intentionally not specified.
Figure 1: Use of an independent alias for a P2P digital pound payment
Footnotes
- Note: The stages numbered with white circles involve sharing the independent alias.
The operation of a digital pound alias service would also require the issuance of new account aliases, and the application of rules regarding their use. For example, before a new alias is issued, it will need to be checked for duplicates and false representation. There may also be examples of aliases that PIPs are required to issue for each new end-user account (eg account number and sort code for interoperability with bank deposits).
A digital pound alias service would need to be accessible whenever an independent alias is used to initiate or request a payment, otherwise it will not be possible to complete the payment. This means a digital pound alias service would be important infrastructure within the digital pound ecosystem, should the use of independent aliases be enabled.
Role of the Bank in providing any digital pound alias service
Key design question – should a digital pound alias service be hosted by the Bank?
The Technology Working Paper consultation included a question regarding a digital pound alias service: Do you agree with the need for aliases (both well-known and disposable)? If so, should the alias service be hosted as part of the Bank-managed infrastructure, or should it be distributed across the CBDC ecosystem?
Responses were in strong agreement that there is a need for digital pound account aliases. There was less consensus, however, on where the alias service should be hosted within the digital pound ecosystem (ie who should operate the alias service). Arguments in favour of the alias service being hosted by Bank-managed infrastructure centred on the fact it would be an important service within the digital pound ecosystem. Arguments against drew on how a Bank hosted solution could hamper innovation, and that it would increase the risk of the Bank being perceived to hold personal data, even though it would not be accessible.
The consultation responses have helped inform our proposed position, which sets out whether there will be a digital pound alias service, and if so, what role the Bank could take in its provision.
Our proposed position
We are proposing an alias service in the digital pound ecosystem, which will enable the use of independent account aliases. As important infrastructure, we consider that alias service functionality will need to be provided, to some degree, by the Bank as operator of the core digital pound infrastructure. The Bank will play a role in maintaining the data repository that maps each independent account alias to, and only to, the PIP providing the account, as well as providing PIPs with quick and easy access to the repository when required. The Bank, as owner of the digital pound scheme, would also be responsible for setting and applying the rules regarding the use of account aliases in the digital pound ecosystem.
One solution would be for the Bank, potentially through a third party, to host and maintain the independent alias repository. An advantage to this approach would be reducing requirements on all PIPs, lowering the barrier to providing digital pound services. It would also grant the Bank, as operator of the core digital pound infrastructure, a high-level of control over an important service. This approach would however require careful management to adhere to our commitments on end-user privacy, specifically that the Bank and Government would not access end-users’ personal data through core digital pound infrastructure.footnote [9] In line with our privacy commitments, we will further explore ways to ensure no personal data contained in any independent alias repository would be accessible to the Bank or Government, including, but not limited to, the use of privacy enhancing technologies (PETs).footnote [10]
At a minimum, PIPs, not the Bank, will each need to maintain a repository mapping each alias they have issued to details of the associated account, including any required personal information on the account owner. PIPs would also need to issue aliases for their customers, adhering to the relevant scheme rules set by the Bank.
We are also investigating an alternative solution, where each PIP, instead of the Bank, would maintain a local repository containing all independent aliases in the digital pound ecosystem. The Bank would still play a role as ‘orchestrator’ of the service, requiring each PIP to have an up to date and correct repository of independent aliases. This could reduce costs and operational requirements for the Bank as operator of the core digital pound infrastructure, while still adhering to our commitments on end-user privacy. PIPs would have additional requirements with this approach, some of which the Bank could support via the provision of SDKs.
We will continue to investigate the trade-offs between these different approaches regarding the Bank’s role in the provision of any digital pound alias service.
Next steps and how to engage
We plan to further investigate the opportunity for digital pound account aliases, as well as the role the Bank might take in providing the alias service. We will continue to work with a wide range of stakeholders – including payment firms, banks, merchants, fintechs, charities and infrastructure providers – to test our assumptions and better understand what a digital pound alias service would need to provide, and how.
As the design phase progresses, further design notes and technical experiments will support ongoing development of the digital pound blueprint. These will help clarify how core features could work in practice and how different elements of the ecosystem could interact. The position taken in the blueprint on a digital pound alias service will continue to evolve based on this work.
We welcome feedback on the content of this note, particularly on:
- The potential benefits of aliases for retail payments in the UK.
- Our proposed role of the Bank, as operator of the core digital pound infrastructure, in providing a digital pound alias service.
Comments can be submitted via email to CBDC@bankofengland.co.uk
Further updates on the design phase and related publications are available on The digital pound page of our website.
For card payments, the equivalent identifier is the primary account number (PAN), also known as a ‘card number’.
In Argentina, all accounts have an alias CBU, where the default format is a random combination of three short, frequently used Spanish words: Now all Bank Accounts Have an Alias CBU.
We are defining a P2P payment as a payment made between two individuals that can involve intermediaries.
This is made possible by having an alias service that maps each user’s mobile number to an IBAN, an internationally recognised account identifier compatible with the SEPA Instant payments scheme operating in each of the associated jurisdictions.
These transactions are sometimes referred to as ‘off-us’ transactions, where the payer and payee have accounts provided by different institutions.
Payments made between accounts provided by the same institution are sometimes referred to as ‘on-us’ transactions.
Specifically that digital pound account aliases could enhance end-user functionality and aid interoperability with other payment systems.
UPI, a payment service in India, assigns UPI IDs, or virtual payment addresses, to users’ accounts. These take the format of ‘username@bank’: What is UPI ID? How to Create, Find and Send Money Using your UPI ID?.
Our commitment on end-user privacy: The Bank and the Government would not access users’ personal data through the Bank’s core infrastructure – and legislation introduced by the Government for the digital pound would guarantee users’ privacy. The Bank commits to exploring technological options that would prevent the Bank from accessing any personal data through the Bank’s core infrastructure.
In the blueprint, we will set out in detail how our position on any digital pound alias service aligns with our commitments on end-user privacy.