The United Kingdom, as a powerhouse for capital, banking, investment, and financial infrastructure, exerts critical influence on global commerce and capital markets. In an economy as digitally integrated and globally connected as the UK’s, payments are the infrastructure beneath every market interaction from settling daily grocery bills to funding multi-billion-pound cross-border trades.
Over the past decade, the UK is navigating a major transformation driven by technological breakthroughs, forward-thinking regulations, and changing consumer expectations.
Even through the recent friction from Brexit, inflation, and geopolitical shifts, the UK's financial and related professional services sector contributed a massive £281 billion to the economy in 2024, making up about 12% of the UK's entire economic output. These flows require a payment infrastructure that can be a formidable backbone to commerce, investment, and public services alike with nearly 50 billion transactions made in the UK by both consumers and businesses in 2023 alone.
Inefficiency or insecurity in this system can become a hindrance to the UK's most productive industry, which is why regulators have taken such a hands-on approach to shaping its future. The world is seeing a revolution that is modernizing how money moves within and beyond the sixth largest economy in the world.
The Great Shift: The UK’s Payment Evolution in the Past Decade
The last decade of payments evolution began with a wave of technological breakthroughs. Near Field Communication (NFC) made tap-to-pay not just possible, but faster than cash for everyday purchases. Smartphones brought banking to our fingertips and led to the adoption of digital wallets like Apple Pay and Google Pay. Consumer expectations changed as they demanded increasingly faster, more secure, and more convenient ways to pay. Remote working altered spending patterns, and the cost-of-living crisis heightened demand for tools that gave better control—like debit cards and real-time balances via mobile apps.
The formation of the Payment Systems Regulator (PSR) in 2015, was designed to open the market and enable innovation. As real-time rails exposed new fraud vectors, regulators responded again—mandating Confirmation of Payee (CoP) to mitigate Authorized Push Payments (APP) scams.
In the next year, the contactless payment limit was raised, now allowing purchases for a range of everyday needs like fuel or groceries. This trend grew until the ultimate tipping point in 2017 where cards overtook cash payments as the UK’s most popular payment method. Contactless payment technology introduced in 2007 became the catalyst for this shift with card payments growing from just 7% in 2016 to nearly 40% of all UK payments in 2023.
By 2018, the era of Open Banking began that was implemented with the launch of the EU's second Payment Services Directive (PSD2). This mandated the UK's largest banks to build secure data-sharing channels (APIs), setting the technical and legal foundation for a new wave of fintech competition.
The pandemic further accelerated the decline of cash with usage falling by 35% in 2020 alone as consumers and retailers favoured contactless payments. By 2023, debit cards accounted for over half (51%) of all payments in the UK. Contactless payments make up a record 93% of all eligible in-store card transactions, solidifying tap-and-go as the standard way to pay.
In October 2024, the UK implemented mandatory reimbursement for Authorised Push Payment (APP) fraud across Faster Payments, significantly strengthening consumer protection. At the same time, Confirmation of Payee (CoP) coverage expanded to nearly 99% of transactions, closing critical gaps in fraud prevention and reinforcing trust in digital payments.
Together, this formed a powerful flywheel: regulation drove technology, which drove adoption, which raised new challenges fueling the next wave of regulatory and technical evolution. Before we look at these challenges, let's review the current scenario of the payments infrastructure in the UK.
The UK Payments Landscape Today
The current scenario is a mix of the old and new. Disruptive new technologies pose a challenge to established infrastructures and need to adapt.
- Cards and real-time rails
Contactless debit card payments are by far the most popular payment methods in the UK, with 93.4% of all eligible in-store card transactions powered by contactless technology. While digital wallets like Apple Pay are contributing to the dominance of contactless payments, the Faster Payments Service (FPS) has become critical infrastructure, supporting everything from online banking to the future of Open Banking systems.
- Neobanks
Neobanks like Monzo, Revolut, and Starling are reshaping how consumers in the UK interact with financial services, moving them from fringe disruptors to mainstream financial institutions. Their intuitive apps, instant payment features, and seamless integration with mobile wallets have set new expectations for user experience. By 2024, 14% of UK adults with a digital-first bank account had an account with a major neobank.
- Open Banking
The UK's flagship initiative to spark innovation is still maturing and gaining traction. It has seen significant user adoption with over 10 million active users but still only accounts for about 1% of total payment volumes. Upcoming features like Variable Recurring Payments (VRPs) could be expected to make open banking another mainstream alternative to cards.
- Cash decline continues
Cash usage now accounts for less than 10% of all transactions. While still important for the unbanked and older populations, it’s increasingly marginalized in retail and urban settings.
- Proactive regulatory action
Confirmation of Payee (CoP) and a mandatory reimbursement scheme were two key regulatory tools used to fight Authorised Push Payments (APP) fraud when losses hit as high as £459.7 million in 2023. At the same time, the Financial Conduct Authority (FCA) and Payment Systems Regulator (PSR) continue to push for competition, innovation, and consumer protection.
Challenges facing the Revolution
Despite its rapid transformation, the UK payments landscape face challenges ranging from prevention of sophisticated financial crime to addressing issues of market competition, regulatory complexity, and ensuring new technologies achieve widespread adoption.
- The Persistent threat of fraud
Authorised Push Payments (APP) fraud remains a persistent concern to the UK payments infrastructure, with the speed and convenience of real-time payments making them vulnerable to scams. CoP has contributed to a 17% reduction in APP fraud in 2023, however there are questions about its effectiveness, as fraudsters develop new social engineering tactics to bypass warnings. - Slow adoption of Open Banking payments
Despite strong regulatory backing, Open Banking has struggled to gain traction, accounting for just 1% of total payment volumes. Most consumers still prefer familiar methods like cards and wallets. Without a viable digital alternative to card schemes, the UK's ambition to modernize payments remains unfulfilled. - Regulatory complexity and financial inclusion
The push for innovation has led to a burdensome and expensive regulatory environment. Initiatives like PSD2 and SCA, while enhancing security, have added cost and friction. Meanwhile, cash remains vital for many, especially vulnerable groups, requiring policymakers to ensure access amid digital dominance. - Trust deficit for new players
Fintechs and challenger banks have large user bases but struggle to become consumers' primary banking choice. Trust remains a barrier, with challengers requiring to respond to the popular perception that traditional banks are more reliable.
A Look into The Future
- New Payments Architecture (NPA) goes live - The UK’s New Payments Architecture (NPA) is set to fundamentally modernize the country’s payment rails. By consolidating Faster Payments and BACS into a single, API-first, ISO 20022-compliant infrastructure, the NPA will allow richer transaction data, improved fraud detection, and better interoperability across financial institutions.
- Real-time, account-to-account (A2A) payments mainstreamed - A2A provides a lower-cost, faster alternative to cards by eliminating intermediaries like schemes and acquirers. Already gaining ground in e-commerce and P2P contexts, A2A is expected to be widely adopted for utility bills, subscriptions, and point-of-sale purchases. The combination of Open Banking and NPA is set to push real-time account-to-account (A2A) payments into the mainstream.
- Digital wallets dominate POS and online checkouts - Apple Pay, Google Pay, and other mobile wallets will continue displacing physical cards across the UK, especially among digital-native consumers. Mobile wallets are expected to handle the vast majority of contactless and online transactions, thanks to their frictionless experience, biometric security, and integration with loyalty, rewards, and BNPL options.
- AI-native fraud detection becomes standard - Banks will increasingly rely on AI-driven behavioural analytics, graph-based anomaly detection, and real-time transaction analysis to significantly prevent APP fraud. Financial institutions are expected to embed fraud detection into the transaction layer itself, using AI to score intent, context, and deviation at the edge.
- Rise of embedded finance & fintech orchestration - The next wave of payments infrastructure will be defined by orchestration and embedded finance. Businesses — from e-commerce platforms to SaaS providers — will embed payments directly into their flows using modular, API-first infrastructure. They’ll leverage orchestration engines to route transactions intelligently between acquirers, payment methods, and geographies. This unbundles the traditional acquiring stack and creates interoperable systems where merchants can plug in fraud, routing, tokenization, and settlement providers as needed. Banking-as-a-Service (BaaS) providers will also enable brands to issue cards, offer credit, or hold funds natively — blurring the lines between merchant and bank.
- Toward invisible, programmable payments - Looking even further ahead, UK payments will move toward “invisible” and programmable flows. Transactions will increasingly be initiated by context rather than explicit customer actions. Identity, authentication, and routing will be embedded into the environment via IoT, biometrics, and AI. Coupled with programmable money standards and potentially a regulated digital pound (CBDC), this evolution will allow rules-based, intelligent flows where users define conditions (“pay rent only after salary received,” “auto-refund for late deliveries”), and the system executes them securely in real time.
How can Juspay Power the Future of Payments?
As the payment revolution continues in the UK, the Juspay payments ecosystem helps businesses combat today’s infrastructure gaps while future-proofing their payment experiences for what's ahead.
Juspay fraud and risk management tool assess transaction risk in real time—factoring device signals, behavior, and context. Dynamic authentication (SCA, passkeys) prevents fraud before it happens, aligning with CRM obligations and reducing reliance on post-transaction reimbursement or manual review.
Juspay enables smart routing across multiple payment service providers. Merchants gain cost control, resilience, and optimized authorizations—reducing dependence on schemes and avoiding fee shocks from cross-border or high-interchange card usage.
Driving Open Banking payment adoption: Despite regulatory support, Open Banking adoption is low due to poor UX. Juspay powers seamless A2A checkouts with fallback logic, passkey login, and retry flows—improving conversion and reliability. Its VRP-ready stack makes recurring payments viable, offering a modern alternative to Direct Debit.
Simplifying compliance, minimizing friction: UK merchants face heavy compliance costs from PSD2 and SCA. Juspay abstracts complexity with modular APIs, intelligent 3DS orchestration, and audit-ready infrastructure. Features like token vaults and risk-based authentication ensure compliance without degrading UX—critical in regulated, mobile-first payment environments.
