What UK merchants want from their payment provider in 2026

The Paypers interviewed Arnaud Le Saouter, Client Director at KAE, to learn about what UK merchants want from their payment providers in 2026.

KAE recently launched The Merchant Lens Report 2026, based on a survey of 216 UK merchants on how satisfied they are with their PSPs, what would make them switch, how they evaluate providers, which solutions matter most to them, and how they feel about the trends shaping the payments industry. To set the scene, what does the data tell us about how UK merchants view their payment providers today?

What comes through very clearly to me is that UK merchants are not dissatisfied in a dramatic or obvious way. In fact, at first glance, the picture looks highly positive: 92% of merchants say they are satisfied with their current payment provider, 88% would recommend them, and 88% expect to continue using them over the next year.

But the more interesting story sits underneath that satisfaction. Merchants are broadly content, but not necessarily deeply loyal. They tend to stay with their provider because the core service works, switching feels disruptive, and payments are often seen as something that should simply operate in the background. 

What we found is that merchant satisfaction is largely experience-driven. It is built on how easy a provider is to work with day-to-day e.g. customer service, reliability, ease of use. That tells us something important, namely that many technical features, things like fraud tools or cross-border functionality, have become expected, and matter far less to satisfaction than you might expect. 

So, overall, I would describe the market as satisfied but alert. Merchants are not rushing to switch, but they are paying attention. They know payments affect customer experience, cash flow, operational efficiency, and growth and as their businesses evolve, they expect their provider to evolve with them.

Your data shows that 92% of merchants are satisfied with their provider, yet 94% said they could be persuaded to switch. What triggers merchants to look elsewhere?

In my opinion, this contrast between high satisfaction and high switching intent is one of the most interesting findings in the entire study. It shows that satisfaction should not be confused with immunity from switching. Merchants may not be actively looking to move, but that stickiness is conditional.

To understand what breaks it, you must look at two distinct things: what merchants say would prompt them to switch, and what is already frustrating them beneath the surface.

On the switching triggers, we found that the data is fairly unambiguous. Cost is the most common trigger – over half of merchants (56%) said that high or increasing costs would prompt them to review their provider. After that, operational issues come into play – for example technical issues (41%) and poor customer support (34%) are both significant triggers. But capability gaps matter to. Merchants also start to look elsewhere when their provider can no longer support where the business is heading. So, the triggers are both defensive and growth-related.

But the more revealing picture comes from the frustrations that merchants are already experiencing, even while they report being satisfied. We found that high transaction costs are on top of the list of current frustrations, followed closely by slow or unreliable settlement and poor customer support. And when you dig further, integration difficulties, fraud and chargeback issues, or system downtime all surface as well. None of them are dramatically high, but are consistently present across our merchant base.  The truth is that switching is rarely caused by one issue in isolation, rather it’s usually the result of repeated friction that builds up over time. 

So, the real question for providers isn't whether merchants are happy today, but whether they’re addressing the issues that could eventually push them to leave tomorrow. The merchant who is quietly irritated by rising costs or patchy customer service is the same merchant who, when asked what would make them switch, puts cost and support quality at the top of the list.

It is worth mentioning here that we also found an important size dynamic that providers should be aware of. For smaller merchants, cost pressure is a significantly stronger switching trigger, at 65%, whereas for larger businesses, technical issues, the ability to support new payment methods, and integration capabilities become more prominent drivers. That means a one-size-fits-all retention strategy is likely to miss the mark for significant portions of the market.

88% of merchants said they'd pay for a new service to support future growth. What are merchants asking for, and what does that say about where value is moving in payments?

That willingness-to-pay finding is one of the most commercially significant things to come out of this research, and I think it fundamentally reframes how payment providers should think about their role.

Let me start with what merchants are actually asking for. When we looked at the services merchants don't currently have, but actively want, the demand is broad and, in many cases, nearly universal. Fraud detection and prevention tools, advanced reporting and analytics, and instant settlement are no longer differentiators, they are baseline expectations. 

But when you look at where real unmet demand sits, the data points toward capabilities that go beyond transaction processing entirely. Customer insights and purchase behaviour data is wanted by nearly half of merchants who don’t currently have it, along with financing and working capital solutions, loyalty and rewards integration. These are all tools that help merchants run and grow their businesses, not just accept payments.

And actually, when we crossed those wants against willingness to pay, the conversation stops being about retention and starts being about revenue. 

Fraud tools came out as the most readily monetisable capability, and data and analytics – customer insights, reporting, faster payouts – weren't far behind. What's really interesting here is how much higher that willingness climbs among larger businesses, which points to a real tiering opportunity for providers who can package these capabilities in the right way.

So I’d say value in payments is moving beyond (payment) acceptance. The payment provider is no longer judged only on whether it can process a transaction. Merchants want intelligence, flexibility, and support around the transaction. Providers that can position themselves as genuine business partners, and not just infrastructure suppliers, have a real opportunity to demonstrate and create value, and to monetise it.

Which trends are merchants treating as genuinely important, and how are they thinking about them in practice?

Awareness was one of the things that stood out most to us. Across topics like account-to-account (A2A) payments, biometric authentication, Embedded Finance, AI-based orchestration, agentic AI, and stablecoins, merchants were not only aware of them but could articulate why each mattered to their business. But awareness and readiness are two very different things, and the data is quite precise about where that gap exists.

Account-to-account payments are a good example. A2A was seen as one of the most important future developments, particularly because merchants can connect it to tangible benefits such as lower costs, instant settlement, cash flow planning, fraud management, and changing customer payment preferences. It feels relatively understandable because it maps onto problems merchants already recognise. Around half of all merchants see A2A as having meaningful impact on their cashflow planning and customer payment preferences – and for larger organisations, that figure rises significantly.

Biometrics is interesting because adoption intent is high – particularly among larger businesses where 87% express intent – but the blockers are customer-facing rather than technical. Concerns around customer acceptance (43%), privacy (42%), and data security and liability (38%) are what is holding adoption back. Those are not problems that a provider can solve with a product update. They require trust-building over time and honest engagement with customer concerns. 

And then there's AI. It would be hard to talk about any industry right now without it coming up, and payments is no exception. What's interesting is that our data reflects exactly what we're seeing more broadly – larger, more sophisticated businesses are already leaning in, while smaller merchants are still figuring out what it means for them in practice. AI-based payment orchestration and agentic AI both show that same divide: high awareness and trust among large organisations, much lower among smaller ones. So the technology is there, the interest is there at the top end of the market, but the industry still has work to do in making it feel accessible and relevant further down.

Beyond those, we identified a number of other trends that merchants are watching with interest – Embedded Finance being a notable one – though readiness varies and the barriers tend to be more about implementation complexity than appetite. And then at the other end of the spectrum, stablecoins sit furthest from adoption – not because merchants are hostile to it, but because the primary blocker is demand-side uncertainty. Merchants want to know their customers will use it before they invest in it. 

If payment solution providers want to stay relevant as merchant needs evolve, what does the research suggest they need to understand first?

If I had to distil the research into one message, it would be this: understand the merchant before you try to sell the solution.

That may sound obvious, but it is easy to overlook in payments, where the industry often leads with technology or features. Merchants do not tend to think in those terms first. They think in terms of business problems: cost pressure, reliability, ease of use, growth.

We have a market where 92% of merchants are satisfied, but 94% could be persuaded to leave. Where the frustrations that drive switching are already present but are operating just below the threshold at which merchants feel compelled to act. That tells us loyalty is conditional, and the providers that will keep it are those who actively engage with what merchants need, rather than waiting for dissatisfaction to surface.

The second lesson is that merchant needs are not static. 77% of merchants told us they plan to accept a new or additional payment method in the next 18 months. For large businesses, that rises to 90%. Merchants are actively expanding and evolving, and they want a provider who keeps pace with them. The improvement areas our study identified – fraud tools, analytics, financing solutions, faster payouts – are not wish lists. For many of the merchants, failing to deliver on them is becoming a credible reason to switch. 

And this is where the trends piece connects too. Merchants are aware of what’s coming – AI, A2A, biometrics, Embedded Finance – and many can already see the value. But seeing the value is not the same as feeling ready to adopt it. Often, the barriers are less about technology and more about trust, clarity, and not knowing where to start. The providers that stay relevant will be the ones that help merchants make sense of these changes, and in doing so, move from being payment infrastructure suppliers to genuine growth partners.

Our research, taken as a whole, is essentially a brief from merchants to the industry. They have told us what frustrates them, what they will pay for, what would make them leave, and what they want the future to look like. The providers that act on it with genuine depth of understanding, will be the ones that define the next chapter of UK merchant payments.

You can buy the full report from the KAE website or download a free findings summary here. 

About the author

With over 30 years’ experience in payments consulting, Arnaud has advised senior stakeholders across the payments value chain on pricing strategy and optimisation, proposition development, and go-to-market strategy. He has led multi-market projects across the broader financial services industry, with expertise in market entry, product and marketing strategy, and competitive intelligence. Arnaud is also spoken and chaired panels at industry events including CPI and MPE.

 

About KAE 

KAE helps banks, payment companies, and fintechs around the world make data-backed marketing, product, and strategy decisions by uncovering deep customer, market, and competitor insights. For over 30 years they have provided market-leading businesses with the customer and market intelligence needed to shape and execute go-to-market strategies, develop products and experiences, optimise pricing and communications, and build effective sales and partnership ecosystems.