By David Milliken

LONDON, Feb 2 (Reuters) - The Bank of England said on Monday that it will launch a public consultation in the coming months on how consumer payments should work in the future, including making it easier for people to pay electronically without using a debit or credit card.

"We want UK consumers to have the option to pay retailers in-store or online directly out of their bank accounts as a complement to doing so via card schemes," Deputy Governor Sarah Breeden said in a speech on Monday.

Cash is used for less than 10% of payments in Britain while debit and credit cards account for nearly two thirds of transactions, making U.S. firms Mastercard MA.N and Visa V.N effective gatekeepers most day-to-day financial activity.

In November, Britain's finance ministry, along with the BoE, set out a strategy for retail payments infrastructure which included encouraging banks and other financial companies jointly to develop a greater range of payment options for consumers.

Breeden said greater competition might lower transaction fees for smaller retailers - which typically pay four times as much as the largest chains - and provide greater resilience against cyber attacks and other risks.

A wider consultation would take place in the spring, and before then the BoE was setting up panels to gather input from groups outside the finance industry as well as within it.

She gave the speech at a conference hosted by financial events company City & Financial Global, and was asked by one audience member if Britain's strategy echoed sovereignty and security concerns elsewhere in Europe.

Breeden did not address these issue explicitly but replied that "if you've got more than one way to pay at point of sale, in the rare event of an operational disruption, you're best able to continue to have economic activity."

The strategy would also look at how to ensure traditional money joined up with any future stablecoins or a possible BoE-run digital currency, as well as reducing the cost of crossborder payments, she said.

Any new payment options were unlikely to fully displace debit and credit cards, as other countries such as Sweden, India and Brazil had multiple options coexist, she added.

(Reporting by David Milliken; editing by Suban Abdulla)

((david.milliken@thomsonreuters.com; +44 20 7513 4034;))