Fraud concerns outweigh UK payment innovation

By Vriti Gothi

Growing consumer unease around payment fraud is reshaping the debate over the future of the UK’s digital payments landscape, highlighting a widening trust gap that could slow the adoption of new payment technologies. Despite ongoing regulatory interventions and industry-led security upgrades, public confidence in everyday payment channels continues to lag, placing pressure on financial institutions, regulators, and technology providers to shift their focus from innovation to systemic fraud prevention.

The UK has long positioned itself as a progressive payments market, with rapid digital adoption, strong FinTech penetration, and a pipeline of emerging payment methods. However, the surge in authorised push payment (APP) scams, social-engineering fraud, and cross-platform financial crime has altered consumer expectations. While digital payments remain entrenched in daily life, users increasingly express uncertainty about the adequacy of existing safeguards and scepticism toward new mechanisms that may add complexity without improving safety.

Industry observers note that the Payment Systems Regulator’s (PSR) mandatory reimbursement rules, which require banks to compensate victims of most APP scams, marked a significant policy shift aimed at easing consumer financial harm. Yet, experts argue that refund policies address only part of the problem and do little to deter sophisticated fraud operations that exploit technology platforms, messaging services, and payment flows.

Jonathan Frost, Director of Global Advisory for EMEA at BioCatch, said, “The UK’s approach remains overly defensive. Payment fraud tops consumer concerns because the UK’s fraud controls remain reactive rather than preventative. While the PSR’s mandatory reimbursement requirements have successfully returned millions to victims, they haven’t stemmed the underlying crime. The emotional damage to fraud victims happens long before compensation enters the picture, and lasts long after. If consumers feel exposed using the payments they already rely on, it’s no surprise they’re hesitant to adopt new payment methods.”

This hesitation is reflected in consumer data, indicating that only one in five users believes the UK needs additional payment types at this stage. Instead, the majority want more robust fraud safeguards and stronger accountability across the ecosystem. For analysts, the disconnect signals that payment innovation, traditionally a core driver of competition, may be out of step with public appetite.

The concern extends beyond the banking sector. Fraud originating from social media, online marketplaces, and messaging apps represents a growing share of total losses, prompting calls for greater platform-level responsibility. The forthcoming Online Safety Act and parallel discussions around data sharing, behavioural analytics, and identity verification signal a regulatory environment increasingly aligned with prevention rather than remediation.

For financial institutions, this shift places renewed emphasis on technologies such as behavioural biometrics, device intelligence, real-time risk scoring, and cross-channel fraud orchestration. While these tools are becoming more widely used, adoption remains uneven across the sector.

As the UK prepares for the next phase of payments modernisation—spanning open banking evolution, digital identity frameworks, and future payment standards—analysts warn that innovation risks stalling unless the trust deficit is addressed. With fraud volumes remaining elevated and consumers expressing reluctance toward new payment formats, the industry faces a pivotal moment: progress in payments may depend less on what is built next and more on how effectively existing systems are secured.

In a market known for rapid FinTech advancement, the message from consumers appears increasingly clear: meaningful innovation must begin with confidence.