UK e-commerce is maturing fast, pushing banks to support both cards and open banking. Success will depend on orchestration, fraud control, and modern acquiring infrastructure.
UK e-commerce is no longer an “emerging channel”; it is a permanent share of retail. Online sales reached 27.4% in 2025. The question for acquiring banks is no longer whether to engage, but how to compete as acceptance shifts from one dominant payment rail to multiple.
Landscape
In 2024, the UK made 18.9bn contactless card payments, and half of UK adults used mobile contactless at least monthly. It is said that 57% were registered for at least one mobile payment service. That behaviour makes customers expect near‑instant checkouts and predictable outcomes, whether in‑store or online.
Open banking is starting to fit that expectation. Open Banking Limited reports 351 million open banking payments in 2025, supported by 24bn API calls and 16.5m user connections. Those are large nationwide volume signals. Governmental policy direction supports it by prioritising the enablement of open banking account-to-account (A2A) payments for commerce in the near future.
The UK already has the infrastructure for widespread adoption of faster bank-based e-commerce payments. According to Pay.UK reports Faster Payments processed 5.09bn transactions worth £4.2tn in 2024.
Regulation
Three regulatory moves shape the decision window.
Firstly, the PSR reported that Mastercard and Visa increased core scheme and processing fees to acquirers by at least 25% since 2017, costing UK businesses at least £170m extra per year. That cost pressure is colliding with a wider debate. In the UK, that same dependency is now being discussed in boardrooms, Yahoo Finance reports the UK’s biggest banks are meeting to explore a national alternative to Visa and Mastercard, citing that up to 95% of UK card transactions run over those US-owned networks.
Secondly, the push‑payment trust is being rebuilt with the government trying to make it safer for consumers. In the UK, the PSR’s APP reimbursement policy began on 7 October 2024, with a £85,000 cap per claim and stated coverage of 99.8% of scams by volume. The policies incentivise banks and PSPs to invest more in modern fraud-prevention mechanisms, including behavioural profiling and scoring, as well as KYC.
Lastly, open banking becomes more regulated, like national infrastructure, with rules about who runs it, how data is stored, how it’s funded, and how participants must behave. The Data Act 2025 DUAA is intended to enable data sharing to work safely and consistently. The FCA will oversee a new Future Entity to set standards, monitor APIs, certification, and commercial dispute processes for open banking.
Current challenges for banks and PSPs
Trust is the first constraint. The main reason pay-by-bank is not yet widely used in the UK for e-commerce is that merchants and customers need to trust it will work reliably in real shopping situations. UK Finance notes that pay-by-bank is emerging, but found no evidence of acceptance by major retailers. Retailers understand real business results: the number of conversions, simplified refunds, automatic, fast reconciliation, and quick customer support that works at scale.
Compliance is the second constraint. FCA protection rule changes take effect from May 2026 for payment and e‑money. The rules make it harder to run a payments or e-money business, because they will have to prove that customer money is protected and can be returned quickly if the company fails.
Legacy technology is the third constraint, particularly for traditional banks. OBL highlights that sustained API demand requires operating models built around reliability, performance, and predictable scaling.
Pay-by-bank will only be adopted at scale when it improves the practical benefits that card payments already provide, not just the ability to move money. And scaling open banking UK-wide requires top-of-the-line fraud monitoring, the absence of which may slow down under-prepared banks and PSPs, but increase trust in those that meet the standard.
What traditional banks should fix
Modern e-commerce acquiring is moving toward checkout orchestration. That means routing and managing payments to optimise authorisation rates, reduce fraud loss, support familiar payment methods, and control costs across cards, wallets, and A2A. For traditional banks and PSPs, the aim is to offer merchants a seamless experience: one integration, one reporting layer, and one operational playbook that meets compliance, scheme rules, and certifications.
Data security is another important point. Regarding cards, which have enabled seamless two-factor authentication, for account‑to‑account methods, this means integrating SCA, KYC controls, and online real-time fraud monitoring into end‑to‑end payments, in line with the National Payments Vision.
This is where technology choices become strategic. Banks that want to compete in e-commerce cannot treat fraud, acquiring, and instant payments enablement as bolt-ons on their legacy platforms. They need modern, API-first platforms that integrate quickly with PSP ecosystems and open banking frameworks. Vendors such as BPC, with platforms like SmartVista, support this by providing modular acquiring and fraud capabilities, including online monitoring, rules/ML-assisted controls, case workflows, and broad open APIs. Locking into closed legacy platforms is a trap: it slows time-to-market, limits routing and risk flexibility, and makes it harder to scale open banking initiatives.
For traditional banks, the priority is to implement the pay-by-bank step by step. Start where the value is clearest, where card costs are high, and the new alternative could be attractive (for example, repeat payments), and where fraud, disputes, and refund complexity are lower and easier to control. Banks and PSPs that treat 2026 as “learn” time rather than “wait‑and‑see” will be better positioned when scheme rules and customer expectations harden.
Conclusion
Cards will stay the main way people pay in the UK for the foreseeable future. But the UK is also intentionally building A2A via open banking so it can become a real option online and later in-store.
So it is not cards or open banking. It is cards and open banking. The winners will be the traditional banks and PSPs that can offer both in one merchant-ready setup, keeping checkout smooth, fraud under control, refunds and disputes clear, and operations resilient.
