Consumer & Commercial Payments
May 16, 2025
As digital payments outpace plastic, UK banks must modernise card infrastructure or risk losing relevance to faster, cloud-native challengers.
Four years ago, the UK made 15.8 billion debit-card payments and logged 9.6 billion contactless taps, already more contactless transactions than people on the planet. Over 98% of the population held debit cards for daily payments. Debit cards then accounted for just under half of all payments, and credit cards for less than 8 per cent. And it was just the start.
By 2023, the acceleration was apparent. Debit-card payments reached 24.5 billion and went on to 30.2 billion, contactless volumes to 18.3 billion. In 2024, the number of cards peaked at 31.4 billion operations, which shows a significant slowdown and loss of interest in the population in plastic. In parallel, alternative and modern payment methods are predicted to grow. For example, virtual payments cards propelled by brands such as Revolut, Starling, Stripe, Skrill, Monese and other challengers generated over 1.5 billion USD revenue in 2024, with a forecast to triple in the next five years.
If your bank still measures success in the issue of plastic cards, how will you stay relevant when the next billion “cards” are nothing more than a token in a wallet?
One third of UK adults (33%) now live largely cash-free, and six in ten manage money through a mobile banking app. It becomes evident that the digital appetite stretches far beyond cards. For instance, 2 out of 5 online purchases in the UK were made by digital wallet(6). Tap-to-phone, A2A payments, QR payments, and BNPL—new adoptions—were well met among consumers as well. In 2024, the Faster Payment System processed over 5 billion transactions.
Traditional infrastructures are stagnating. A three-day banking mobile-banking outage in January 2025 alone could cost up to £7.5 million in compensation(7). In fact, a Treasury Committee tally shows 158 IT failures and 803 hours of downtime across nine major banks in just two years. When a five-person fintech can spin up an issuer processor in 30 minutes, what does a three-day outage say to retail and corporate clients of current financial institutions?
UK Finance projects card share of payments to rise from 61 % today to 66 % by 2033. But the main growth will be in digital, embedded and instant. The next-generation card processing 2025 study finds that next-generation card issuing processors are expanding four times faster than the overall market, propelled by cloud-native stacks, flexible consumption-based pricing and open APIs.
A modern card issuer, therefore, should be capable of providing white-label, launch capability, because product teams iterate weekly, not annually, no-code/low-code orchestration, so business owners, not devops, define spend rules and loyalty logic, Cloud nativity across AWS, OCI or GCP, open APIs, AI-assisted servicing and fraud decisioning and on-boarding-as-a-Service for the less than five-minute account creation experience that challengers have normalised nowadays.
The competitive set is obvious: Monzo, Revolut, Starling, Tide—all these card-centric challengers deploy features monthly, if not weekly. To stay in the race, incumbents must treat card modernisation as a strategic need.
McKinsey estimates that IT already takes over 20 % of a bank’s total expenses worldwide. At the same time, another research study found that UK bank tech spend was at £10.7 billion in 2022, and is predicted to head for nearly £14 billion by 2026.
Migration and tech stack upgrades have become mainstream, in a good sense. Card management as a service (CmAAS) is shortening the cycle from launch to revenue generation for new card programmes from an average of 18 months to under six. Fast time to market with instant onboarding and modern card programme development now matter. Also, merchant propositions matter. Visa’s Tap-to-Phone momentum shows SMES’ appetite for SoftPOS.
Yet innovative card programmes alone might not be enough. Those who really aim to the top must take a holistic view: every new feature must be delivered through channels that remain resilient and secure end-to-end. That means integrating AI-driven behavioural analytics, real-time fraud-prevention engines, and continuous authentication directly into the same platform that issues the card, token, or QR credential.
How much longer can a bank claim to be relationship-led when its card-activation flow takes longer than a customer’s coffee order and might not be secure?
For a decade, the UK and Europe enjoyed a comfortable lead in payments innovation. That advantage is disappearing. Emerging markets leapfrog to mobile-first and wallet-only ecosystems, US big tech embeds payments in every app, and specialist processors launch globally from day one.
The conclusion is blunt: UK banks that fail to modernise their card management now will cede their market share to faster, cloud-native rivals. The race is on, and platform agility, not plastic volume, will decide the winners. Your competitors are deploying new card features weekly; what will you release before the end of this quarter?
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