UK Payment Market Size & Share Analysis - Growth Trends & Forecasts (2025 - 2030)

United Kingdom Payment Market Trends and Insights

Open Banking-led Account-to-Account Instant Payments Adoption

Account-to-account transactions scaled to 27.2 million in March 2025, a 67% year-on-year increase that underscores widening merchant acceptance of low-cost, open-banking rails.^{[1]Open Banking Limited, “March 2025 Open Banking Performance Data,” openbanking.org.uk} Variable recurring payments now form 13% of total open-banking volume, unlocking subscription billing use cases once dominated by cards. The government’s GBP 49 million tender to upgrade GOV.UK Pay signals long-term institutional backing for open-banking infrastructure. Merchant costs of 0.1-0.3% per transaction contrast sharply with 1.5-3.4% card fees, intensifying competitive pressure on entrenched schemes. PSD3 alignment positions the UK payment market as a template for European modernization, supporting regional scalability for domestic fintechs.

Strong Customer Authentication (SCA) Driving Tokenised & Biometric Solutions

Heightened fraud losses of GBP 1.17 billion (USD 1.61 billion) in 2024 and Consumer Duty obligations pushed issuers and acquirers toward tokenization and multi-factor authentication, including biometrics.^{[2]Financial Conduct Authority, “Consumer Duty SCA Compliance Review,” fca.org.uk} Visa’s acquisition of Featurespace provides AI screening that adapts to rising real-time volumes. Apple’s wallet integration now exposes bank balances while retaining Face ID security, reinforcing user trust. Early compliance reviews showed only 50% of firms meeting SCA expectations, catalyzing further investment in behavioural analytics. The result is a layered security model balancing frictionless checkout with loss containment.

Digital Pound (CBDC) Consultation Stimulating Infrastructure Investment

The Bank of England’s Digital Pound Lab launched in January 2025, transforming conceptual debate into prototype testing.^{[3]Bank of England, “Digital Pound Lab Announcement,” bankofengland.co.uk} RTGS renewal synchronizes with ISO 20022 messaging, opening settlement access to non-bank PSPs. Programmable VAT split experiments presented in peer-reviewed research illustrate fiscal-policy automation potential. Offline functionality pilots address inclusion and resilience, especially in rural regions. Beyond CBDC issuance, these upgrades modernize the broader payment stack, strengthening the UK payment market for future cross-border innovation.

Raised Contactless Limit Accelerating NFC Penetration

The FCA’s consultation to remove the GBP 100 contactless cap follows 83% population adoption of tap-and-go and 27% share of all UK transactions. Software-based terminals like Teya’s EMVCo-certified Tap to Pay reduce hardware costs for micro-businesses. Worldline’s deployment across healthcare, hospitality, and transit demonstrates sector-wide applicability. Limit removal aligns with risk-based authentication, fostering higher-ticket NFC sales and edging cash further toward obsolescence in the UK payment market.

Escalating APP Fraud & Reimbursement Costs Under New PSR Rules

Mandatory reimbursement up to GBP 85,000 per APP fraud claim from October 2024 splits liability 50-50 between sending and receiving banks. APP fraud losses approached GBP 500 million in 2023, prompting banks to invest heavily in AI detection, staff training, and insurance. The Financial Ombudsman Service can now impose awards reaching GBP 430,000, magnifying exposure. Smaller PSPs may exit high-risk niches or merge, tightening competition yet raising barriers for new entrants.

Legacy Core Banking Systems Limiting Real-time Settlement

RTGS renewal testing in 2024 and go-live in 2025 will not relieve all latency until banks finish core migrations projected for 2026. Older mainframes struggle with ISO 20022 data fields, hindering instant cross-border settlement. Fintechs operating cloud-native stacks can therefore capture niches such as payroll and B2B disbursements that prize speed. However, systemic risk remains until full migration, restraining certain high-value use cases in the UK payment market.

Segment Analysis

By Mode of Payment: Card Usage Endures, Digital Wallets Surge

Point-of-Sale card payments held 45.2% of UK payment market share in 2024, underlining enduring card utility for in-person sales. Overall Point-of-sale contributes 61% of the payment in 2024. Nevertheless, the Online Digital Wallet & Account-to-Account segment is expected to rise at 15.14% CAGR, propelled by Apple Pay, Google Pay, and open-banking solutions. The UK payment market size attributable to this fast-growing segment is projected to expand sharply as merchant acceptance widens. Tokenization and biometric safeguards allow card networks to retain relevance; Visa’s Featurespace deal demonstrates a defensive strategy against fraud risks. Wearables, QR, and gift cards occupy niche roles but enhance consumer choice.

Card issuers are pairing loyalty perks with digital wallets to preserve interchange revenue, while acquirers integrate A2A options to capture cost-sensitive merchants. Open-banking providers market 90% lower fees to marketplaces and utilities, eroding card margin in low-value transactions. As wallet-enabled rails scale, processors innovate with account-range tokenization that secures PAN data while supporting push-provisioning to multiple device types. Collectively, these dynamics diversify the UK payment market, facilitating consumer migration without sacrificing ubiquity. 

By Interaction Channel: E-commerce Drives New Payment Modalities

Point-of-Sale still represents 64.05% of 2024 transaction volume, but online channels are advancing at 15.02% CAGR as post-pandemic habits persist. The UK payment market size processed via e-commerce grew alongside smartphone penetration and one-click checkout adoption. Tap-on-Mobile solutions blur channel boundaries by converting staff devices into terminals, enabling checkout anywhere in-store. SoftPOS uptake accelerates pop-up retail and event commerce, reflecting omnichannel convergence.

Unified commerce platforms aggregate inventory, loyalty, and payments, reducing merchant overhead and improving data insights. PayPal Fastlane skips guest checkout forms, boosting conversion rates, while Stripe’s API standardises integration across web, app, and in-store endpoints. Retailers that deploy unified platforms report higher repeat-purchase rates as friction declines. In parallel, parcel carriers integrate payment links into tracking pages, monetising the delivery touchpoint and extending the UK payment market into logistics interactions.

By Transaction Type: Remittances & Cross-border Payments Lead Growth

Consumer-to-Business transactions comprised 60.21% of 2024 volume due to retail depth. Nonetheless, Remittances & Cross-border payments are on a 16.26% CAGR trajectory, driven by migrant workforce demand and tourism recovery. Open-banking APIs combined with stablecoin rails cut transfer fees and improve transparency, making the UK payment market attractive for international corridors. Alipay+ acceptance in travel and hospitality bolsters inbound Asia visitor spend.

Banks implement correspondent-bank overlays that leverage ISO 20022 data to meet G20 cross-border cost targets. Fintechs bundle foreign-exchange hedging within apps, adding value for SME importers. Regulatory focus on IBAN discrimination and transparent FX mark-ups continues to spur competition. The outcome is a progressively lower-cost remittance landscape that elevates financial inclusion for expatriate communities.

Note: Segment shares of all individual segments available upon report purchase

By End-user Industry: Healthcare Digitization Outpaces Retail

Retail’s 35.72% share remains dominant thanks to high transaction frequency and omnichannel integration. However, healthcare’s 15.04% forecast CAGR reflects electronic patient-record rollout funded by GBP 3.4 billion (USD 4.67 billion) in the 2024 Budget. The UK payment market size attributable to healthcare is expected to climb as bedside payments, portal billing, and integrated insurance claims digitise revenue cycles. Hospitals deploy Tap to Pay for outpatient collections, shortening queuing and reducing cash handling.

Interoperability with clinical systems allows real-time reconciliation of co-payments and refunds, improving patient experience. Pharmaceutical dispensaries adopt subscription billing for repeat prescriptions, aligning with variable recurring payments enabled by open banking. Other industries are following: entertainment platforms focus on seamless recurring billing, and government entities integrate digital identity for secure fee payments. The collective effect is diversified vertical growth across the UK payment industry.

Geography Analysis

London anchors the UK payment market with 94% of national fintech investment in Q1 2025, reflecting deep capital pools and regulatory proximity. High digital readiness ensures near-ubiquitous wallet and contactless penetration in urban centres, yet rural areas lag due to patchy connectivity; government inclusion programmes aim to close this gap by certifying digital-identity providers and promoting open-data energy billing. Northern cities leverage regional fintech hubs to attract investment for alternative lending and payment startups, diversifying geographic innovation.

Post-Brexit realities influence cross-border flows. Remaining in SEPA preserved euro direct-debit simplicity, but heightened interchange fees and IBAN discrimination burden merchants dealing with EU customers. Consequently, businesses pivot to account-to-account schemes for lower-cost payouts. Sterling ranks third in SWIFT traffic, underpinning London’s status as a clearing hub for multi-currency settlements. Tourism from Southeast Asia and China rebounded to 419,000 visitors, generating USD 451 million spend in Q2 2024, spurring hospitality adoption of Asian wallets such as Alipay+.

Scotland pilots regional payment initiatives tied to community banking, while Wales explores public-sector procurement via open-banking rails to lower fees. Northern Ireland benefits from dual-currency proximity to the eurozone, shaping card-scheme routing strategies. Financial inclusion pilots distribute subsidised smartphone terminals to micro-merchants in underserved counties, bolstered by Pay.UK’s national payments vision. Together, these measures reinforce an integrated yet diverse geography that sustains nationwide growth of the UK payment market.