UK: an analysis of payments and ecommerce trends

Mark Beresford, Director of Edgar, Dunn & Company, traces paytech innovation in the UK market – looking first at how it developed historically, then at where payments in the UK are heading – and what it all means for in-store and online shopping.

A high-level view of the UK payments market

The UK payments market has changed dramatically over the last 40 years. It has shifted from cash and branch-led banking toward cards, contactless, mobile wallets, faster bank transfers, and more regulated digital payment services. 

Technology has been the biggest force, especially smartphones, tokenized wallets, and faster payment infrastructure. Regulation also played a major role by supporting competition, consumer protection, and new payment rails such as Open Banking and reimbursement rules for fraud. Consumer behaviour changed too, with people expecting payments to be instant, convenient, and nearly invisible inside apps and checkout flows. Today, consumers don’t use paper cheques, they rarely visit their bank branch, and are more likely to leave the house with only a mobile phone to pay for everyday items and travel on the public transport networks. 

To look at the UK payments market – let’s first start with three industry initiatives that did not survive the dynamic and evolving nature of the UK’s payments and financial services market. 

Switch

Firstly, let us go back to 1988, when the UK launched a debit card scheme called ‘Switch’, which was later merged into Maestro in 2002. The turning point and eventual downfall of the UK’s debit card scheme came when Switch Card Services agreed in 2002 to rebrand Switch to Maestro over a five-year migration plan, which was completed by 2007, with Switch cards out of circulation by 2010. Mastercard then finalised the processing migration in 2003, moving UK Switch debit transactions onto its global debit card platform. That was the end of a domestic debit card scheme for the UK – it lasted just under 22 years.

Mondex

Mondex, launched in 1995 as an ‘electronic cash’ or smart-card money experiment, was designed to let people load value onto a chip card and spend it like cash, including person-to-person transfers, which is why it was often described as ‘decentralised cash’.  Rather than launch nationally, Mondex ran its public trial in Swindon, chosen partly because it was seen as an average British town. It was deemed ‘average’ because its residents’ spending habits could be treated as the norm, making it a good testing ground for Mondex. 

It was later wound down after about three years as it moved toward a commercial phase, with Mondex International eventually absorbed into Mastercard in 2001. Mondex, perhaps ahead of its time, lasted less than five years and only three years as a UK public trial. The Mondex concept – offline cash on a card – was attempted to be sold into Canada and Taiwan, but EMV and contactless were a far superior proposition for banks, merchants, and consumers. 

Paym

Paym was launched in the UK in April 2014. It was a highly anticipated peer-to-peer (P2P) payment service that allowed people to send money securely using just a mobile phone number, removing the need to ask friends or family for their sort code and account number. 

Exactly nine years later, in 2023, the service was permanently shut down by Pay.UK and its participating banks. Paym suffered heavily from a lack of centralised identity. Instead of being a standalone app (like Venmo in the US or Swish in Sweden), it was usually buried deep inside each bank's own mobile app. Furthermore, the banks rarely advertised it, and some branded it differently – for instance, Barclays initially pushed its own version, Pingit.

That’s enough looking in the UK’s graveyard of payment initiatives. Let’s now look forward. 

Innovation in paytech: Open Banking and contactless payments

One of the strongest examples of innovation in the UK is Faster Payments, launched in 2008 and still running today. Faster Payments is the UK’s bank-to-bank transfer service that moves money in near real time, usually within seconds, and runs 24/7. It’s widely used for everyday transfers, person to person payments, bill payments, and business payments within the UK. 

Open Banking has boosted Faster Payments usage by making bank-to-bank checkout and account-to-account (A2a) payments much easier to initiate, which has helped drive more volume onto the Faster Payments rails. Open Banking’s own data says 31 million Open Banking payments were made in March 2025 alone, equal to about 7.9% of all Faster Payments, and that Open Banking payments grew 70% year-on-year. The Open Banking infrastructure, now in its eighth year, provides a strong foundation for Open Finance and the UK’s broader Smart Data agenda.

Contactless payments in the UK started in 2007, when Barclaycard launched the first contactless card, and usage has since grown from a niche feature to the dominant way people pay in stores. By 2024, UK contactless transactions had reached 18.9 billion a year, driven by wider merchant acceptance and the rise of mobile wallets like Apple Pay and Google Pay.

The 2012 London Olympics helped contactless, but it was more of a showcase and accelerator than the sole driver. During the Games, contactless use rose sharply at venues, and one report says usage at Olympic venues was about six times higher than in the same period the year before, helping build public familiarity. 

The COVID-19 pandemic accelerated contactless payment adoption further. UK research shows more than half of people say they now use contactless more often since the pandemic began, and the number of contactless payments rose strongly as consumers avoided cash and preferred quicker, lower-contact checkout methods. According to Barclays, in 2023, 93.4% of all in-store GBP 30 card transactions up to GBP 100 were made using contactless.

Issuers, acquirers, and fintech companies

Card payments, as defined by the international card networks Visa, Mastercard, and Amex, have become the dominant form of payment in the UK, significantly surpassing cash usage. Most UK adults have more than two payment card accounts.

From an issuing perspective, the UK banking sector has changed significantly over the past 25 years as traditional banks have undergone consolidation. Twenty-five years ago there were more than 20 traditional banks, today the UK high street is dominated by the ‘big four’ – HSBC, Barclays, Lloyds Banking Group, and Royal Bank of Scotland/Natwest. Tier 2 names such as Nationwide, Santander, Cooperative bank, and Metro Bank also feature. Alongside them sit the challenger banks, typically internet-only – Revolut, Monzo, Starling, Atom, Monese – plus a longer list of banking-light fintechs operating as e-money or Payment Institutions. 

The UK remains a significant force in the global fintech landscape, particularly within Europe. As of June 2026, there are 387 authorised Payment Institutions (PIs) and almost 263 authorised e-money institutions (EMIs) registered with the Financial Conduct Authority (FCA), the UK’s regulator. 

By contrast, no single one of the 27 EU member states has more than 100 registered EMIs or PIs. Lithuania - seen to be the most progressive and open to aspiring regulated fintech companies – has just 87 PIs and 66 EMIs active registered firms. 

From an acquiring perspective, Worldpay, Barclaycard, and Global Payments make up 71% of the UK market. In April 2025, Global Payments acquired Worldpay, making it the largest merchant acquirer in the UK, with a combined market share of 43% in terms of value of transactions. These acquirers represent the majority of UK based omnichannel merchants. 

New merchant acquirer entrants, however, are finding it difficult to gain significant market share. For example, Tyl (from NatWest) has not yet built a notable presence in the market, and although JPMorgan is a relevant player in the online space, its partnership with FreedomPay to enter the offline space has not gained much traction. 

Based on analysis by the now disbanded Payment Systems Regulator (PSR), approximately 80% of newly signed merchants are acquired by smaller players and Payment Facilitators. The big two incumbent acquirers are finding ways to attract and retain more of these new merchants through vertical specific solutions and new value-added-services (VAS). 

The latest battleground is the middle market and enterprise where the leading UK acquirers – Global Payments/Worldpay and Barclaycard, along with Lloyds Banking Group – hold onto most of the market share. There is a long list of challenger acquirers operating in the UK which include, Adyen, Elavon, Checkout.com, Stripe, Zettle (by PayPal), DNA Payments, Trust Payments, Cashflows, SumUp, and Mollie. 

Just to add to the payment acceptance complexity, and for completeness, there are PayFacs, SaaS based payment providers or Independent Software Vendors (ISVs) and Independent Sales Organisations (ISOs). The ISVs and ISOs are becoming increasingly specialised in certain business verticals, focusing on providing a more tailored experience for merchants from a specific industry. It is also not uncommon for the concept of an ISV to merge with that of an ISO. ISOs are developing and hosting software solutions for their merchant customers to generate additional revenue and create a stickier client environment. 

The result of these developments in the acquiring market is that ISO businesses are becoming harder to ignore in the wider payment processing industry. Within the UK and elsewhere, a growing number of acquirer banks are looking to acquire an ISO and/or an ISV.

The rise of alternative payment methods (APMs) and digital wallets

The use of alternative payment methods in the UK is growing rapidly in the ecommerce sector and has already surpassed traditional plastic card payments in certain ecommerce sectors. Mobile wallets and other digital payment methods have further increased the ease and convenience of card payments both in store and online. 

Apple Pay and Google Pay enable incredibly fast contactless payments. A simple tap of your phone near the POS terminal or transit barrier, and the transaction is completed. Wallets also support in-app purchases, which means payments can be seamlessly completed within ecommerce apps without ever leaving the app itself, streamlining online shopping experiences. 

Open Banking is also enabling direct bank-to-bank transfers, facilitated by services such as Trustly, Truelayer, and GoCardless (recently purchased by Mollie, the Dutch Payment Service Provider). Buy-Now-Pay-Later (BNPL) services such as Klarna, Clearpay, and Afterpay have also gained immense popularity, particularly among younger consumers. 

The future of payments in the UK is increasingly digital and diverse. Online shopping in the UK is highly sophisticated, and merchants generally offer a standardised mix of options to keep checkouts frictionless. 

The UK online payment landscape is anchored heavily by traditional cards, digital wallets, and increasingly, flexible financing (BNPL). Visa and Mastercard debit cards are universally accepted by virtually every single UK merchant. While Visa and Mastercard credit cards are standard, American Express (Amex) is widely accepted by larger retailers, though some small businesses skip it due to higher processing fees. 

Accepting digital wallets is no longer optional for UK merchants, they are heavily favoured for their one-click convenience and built-in biometric security. Apple Pay and Google Pay are universally expected, especially on mobile ecommerce apps or sites built on modern platforms (like Shopify or WooCommerce). Outside of highly niche tech or gaming sites, mainstream UK merchants rarely accept crypto directly due to high volatility, regulatory hurdles, and the very low consumer adoption.

The future of payments in the UK

The UK is already one of the most digitally mature retail markets in the world, with online sales hovering at roughly 28% to 34% of all retail transactions. Because UK consumers are historically fast to adopt digital-first banking and retail tech, the next wave of innovation is moving rapidly beyond basic online storefronts. 

Edgar, Dunn & Company (EDC) believe there are four innovations in the payments landscape that will have a significant impact for both merchants and consumers in the next 5 to 10 years. These are agentic commerce, hyper-personalisation, sustainability, and unified commerce. Whether any of these will end up in the UK’s graveyard of payment initiatives remains to be seen. 

Agentic commerce

The most significant paradigm shift in ecommerce is the transition from predictive AI (which just recommends products based on your past clicks) to agentic commerce (systems that can independently reason, plan, and execute multi-step transactions on behalf of the consumer). Instead of a human shopper manually browsing websites, filtering search results, and filling out checkout forms, a goal-oriented AI agent is given a prompt (e.g., ‘Find and buy the best running shoes within a  EUR 100 budget’) and autonomously manages the entire research and transactional process.

The Competition and Markets Authority (CMA) issued its landmark Agentic AI and consumers report in March 2026, establishing that UK consumer protection laws apply to AI-driven decisions. The CMA mandates that UK businesses remain liable for AI errors or biases and maintain clear human oversight. 

The deployment of 3D Secure (3DS) is a highly common practice in the UK and consumers are very familiar with its benefits. However, 3DS and agentic commerce is currently one of the most critical points of friction in the deployment of agentic commerce uses cases. It represents a fundamental clash between autonomous AI delegation and strict regulatory compliance. When a traditional 3DS challenge is triggered, it requires a human to step in and verify the transaction. If an AI agent must interrupt the user to complete a biometric 3DS scan for every autonomous purchase, the entire value proposition of ‘hands-off’ autonomous shopping is broken. 

Conversely, bypassing 3DS leaves a massive liability vacuum if an agentic agent goes rogue and incorrectly makes a purchase. The industry is finding ways to permit an AI agent to have on a temporary basis, a ring-fenced delegated authority to spend within specific parameters. Stripe has made some enouncements around the ability to bypass standard browser-based 3DS friction by using single-use or dynamic network payment tokens. 

Agentic commerce in the UK is happening but only on an experimental basis or within specific use cases in the interest of testing. Live, real agentic commerce in the UK is expected to happen this year and it could be happening by the time this article is published and you read it in the summer of 2026.

Hyper-personalisation

For the human shoppers who still prefer to browse, storefronts are abandoning the static, one-size-fits-all model. Powered by AI-native infrastructure, the future is expected to be hyper-personalised, effectively, a ‘store for you’ where the product or service is curated based on your personalised preferences, characteristics, body and shoe size, and previous shopping journeys. This is starting to be standard practice on social media platforms, such as Tick Tok and Instagram. 

When you land on a UK ecommerce site, the entire layout, navigation, and product catalogue can re-rank itself in real time based on your immediate probability of buying. Descriptions may even rewrite themselves on the fly to highlight the specific attributes you care about most. For a sports enthusiast, the focus might be on the technical fabric specification of a product, for a professional photographer, a digital camera’s zoom capability. This hyper-personalisation is expected to further evolve in the next few years and uncover an undiscovered consumer need, turning a hidden desire into active consumption and untapped revenues for merchants.

Sustainability

UK consumer behaviour is shifting heavily toward sustainability, and we have seen this behaviour for several years now. Today, over 70% of UK shoppers are actively checking for ethical or environmental data before making a purchase, and the second-hand resale market has gone fully mainstream. 

Innovation in this area of retailing relies on transparency tracking. Some of the leading and forward-thinking retailers in this area are deploying QR codes and links that offer verified supply-chain narratives. This allows products to be tracked through multiple ownership lifecycles, authenticating luxury or refurbished goods when they are resold, and ensuring green claims are backed by hard data that is auditable. 

Part of this focus on sustainability will be the consumer’s requirement to ensure home delivery of products is conducted in an ecofriendly fashion. The greenest delivery models will need to focus on eliminating single-use packaging and reducing carbon emissions during both the delivery of inventory to the warehouse but also fulfilment of the ‘last mile’ – the final delivery trip to the consumer’s doorstep. 

Unified commerce

Lastly, omnichannel finally gives way to unified commerce. For the last 15+ years, UK retailers operated on an ‘omnichannel’ structure, meaning they had an online store, a physical high-street store, and a social media storefront, and possibly a telephone sale channel, but the backend operations were often siloed. The more innovative retailers have managed to combine these into an omnichannel perspective, consolidating reporting, logistics, operations, and customer servicing across the different sales channels. 

By making the payment the common theme across the channels, retailers have been able to build compelling customer journeys – such as click-and-collect or buy-online-return-in-store – just to name two of several omnichannel customers journeys. Each omnichannel journey provides the consumer with a consistent, yet factionless experience that can encompass every touchpoint from browsing to post-purchase servicing. 

The future is unified commerce. This is not just a re-branding of omnichannel but is a fundamental re-think. Retailers are moving toward a single, AI-coordinated backend where pricing, inventory tracking, home delivery options, courier performance, and customer history are identical and fully integrated across every touchpoint – web, mobile, social, POS, agentic. etc. This will allow for adaptive supply chains to auto-replenish stock by predicting local demand patterns based on data analytics. In the future, brand and the prettiest website will not be the winners in unified commence. 

The retailers with the cleanest data sets, greater product discoverability, rich inventory details, the most reliable logistics, and the most frictionless payment experience will be the ones most trusted  by both human shoppers and AI agents acting on behalf of their human owners. This is not a simple implementation of new technology, but a whole strategic shift which is expected to cause anxiety across many retail and merchant operations. Unified commerce, like omnichannel, will take more than five years to perfect and to properly meet the expectations of both merchants and consumers. The shopping journey is about to change forever.

About the author

Mark Beresford is a Director at Edgar, Dunn & Company and has almost 30 years of strategic consulting experience in the payments sector. He is responsible for the company’s retailer and merchant payments practice, working with omnichannel merchants and payment service providers across the globe.

 

 

About Edgar, Dunn & Company

Edgar, Dunn & Company (EDC) is an independent global payments consultancy. The company is widely regarded as a trusted adviser, providing a full range of strategy consulting services, expertise, and market insights. EDC’s expertise includes M&A due diligence, legal and regulatory support across the payment ecosystem, fintech, mobile payments, digitalisation of retail and corporate payments, and financial services.