The UK payments sector is undergoing rapid transformation and is at a pivotal stage. Jarred Erceg summarises the current state of the UK payments market – its challenges, pressures and outlook.
The UK payments sector is a dynamic and rapidly evolving landscape, driven by digital innovation, evolving regulation and a strong Government-led growth agenda.
As payment volumes grow and technologies such as AI and distributed ledger systems emerge, firms must invest in scalable infrastructure, strengthen compliance, and keep customer outcomes front and centre.
Whether you're a payments provider, fintech firm or financial institution, this video offers valuable insights into the future of payments in the UK.
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The UK payment sector is a dynamic and rapidly evolving landscape, underpinned by digital innovation, regulatory reform and a strong government-led growth agenda.
The sector is central to the UK's economic infrastructure, enabling seamless transactions across retail, business and government services, from contactless cards, mobile wallets to open banking and real-time account-to-account payments.
The UK payment market is seeing a continued decline in cash usage and a rise in digital and contactless payment methods.
Annually, the UK processes over 48 billion payments, with debit cards, contactless and mobile wallets dominating everyday transactions.
The Government's National Payments Vision, published in late 2024, sets a strategic direction for the sector.
It aims to build a resilient, inclusive, and innovative payments ecosystem powered by next-generation technologies such as AI, distributed Ledger technology, and enhanced data sharing.
The industry is poised for continued growth, driven by consumer spending, a rise in e-commerce, and increased use of flexible payment options like buy now, pay later, all contributing to rising transaction volumes.
Despite this momentum, payment and E money institutions face a range of complex challenges.
Firstly, regulatory expectations are rising, particularly around safeguarding customer funds, ensuring robust customer authentication, maintaining operational resilience and having a credible wind-down plan.
The FCA's evolving supervisory approach, including the roll out of the Consumer Duty in 2023 is driving firms to adopt higher standards of governance and risk management and to prioritise customer outcomes.
At the same time, firms must navigate the growing threat of financial crime, including increasingly sophisticated fraud and cyberattacks that are harder to detect and mitigate.
This demands enhanced controls, monitoring and incident response capabilities.
Infrastructure is also under pressure as payment volumes increase and new technologies emerge.
Firms must invest in scalable, reliable systems to maintain performance, security, and customer trust.
Finally, the sector must respond to shifting customer expectations and tackle digital exclusion, ensuring innovation doesn't leave customers behind.
The payment sector is at a pivotal stage.
Innovation is moving at pace, regulation is evolving, and consumer behaviour is shifting.
To stay ahead of the curve, firms must invest in resilient infrastructure, embrace compliance and put customers at the heart of their strategy.
For more insight and guidance, get in touch with Jarred Erceg.
