The UK Government is considering scrapping the Payments Systems Regulator and folding it into the Financial Conduct Authority.
The PSR is a fully independent subsidiary of the FCA, but shares some operational services.
A move to abolish the payments watchdog is set against the UK Government's growth agenda as part of an effort to remove red tape from the economy.
A decision is expected to be taken in principle within weeks, according to Sky News, although sources indicated this weekend that the government was "actively considering" a decision to scrap the body.
Such a move is in keeping with an ongoing purge of regulatory bodies under the current Government. The chairman of the Competition and Markets Authority, Marcus Bokkerink, was ousted last month amid concerns that it was hindering growth.
Bokkerink was replaced by Doug Gurr, a former Amazon executive.
Since then, both the chair and chief executive of the Financial Ombudsman Service have announced plans to step down.