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      Customer expectations for payments have changed fundamentally over the past decade. For both financial institutions and retailers, payments are now a key battleground for customer acquisition, retention and brand perception. 

      This shift is driven by the rapid digitisation of commerce, the rise of platform-based ecosystems, and the influence of FinTech and Big Tech. Customers expect payments to be instant, invisible, and intuitive - regardless of channel or context. For banks, this means investment in modernisation programmes that are grounded in customer outcomes rather than infrastructure alone. For retailers, the payment experience is directly correlated with conversion, loyalty and lifetime value. 

      As firms continue to invest in payments modernisation, understanding what customers want - rather than what technology enables - must be front of mind. KPMG’s third annual Payments Modernisation report revealed that 72% of banking executives agree that the main benefit seen from modernising their organisation's payments infrastructure has been an improved customer experience. Building on this, we explore three big themes that underpin the future of customer expectations in payments.

      Ellie Hewitt
      Ellie Hewitt

      Director, Payments Consulting

      KPMG in the UK

      Seamless experience and ease of use

      The payment features that retail customers value the most are ‘ease of use’ (66%) and speed (57%). In the last decade, the transition to frictionless, digital experiences has drastically accelerated the enablement of seamless, easy experiences. The introduction of contactless was the first inflection point in Point of Sale payments - removing the need for PIN entry and dramatically accelerating checkout times. Today, contactless dominates UK payments, especially those enabled by Big Tech digital wallets.

      More recently, focus has shifted to enabling seamless experiences in digital commerce. Secure Customer Authentication, Click to Pay and tokenisation are reducing friction at checkout. Around 35% of transactions globally are now tokenised, which means sensitive card data is replaced with secure digital tokens, enabling faster, safer transactions and higher conversion rates. 

      We expect the next wave to be agentic commerce - where payments become entirely embedded within broader customer journeys and triggered automatically by intelligent systems.

      For both banks and retailers, the implication is that payments must become increasingly invisible. Any friction - whether in authentication, data entry, or channel switching - risks abandonment and lost revenue.

      Context-specific payments

      The National Payments Vision set out the need for expanded payment choice in the UK – and the introduction of Open Banking offers an important new option for merchant acceptance. However, the big opportunity for firms lies in curating this choice intelligently and ensuring that the right payment option is presented for the right use case, rather than overwhelming customers with unnecessary complexity.

      Customers want payment options that are relevant to the context of the transaction and aligned to their specific needs at that moment in time. For example, access to cash is more relevant to specific demographics (e.g., the elderly or digitally excluded); and loyalty-linked account-to-account payments can add value for lower-risk, smaller basket sized payments, such as at supermarket shopping.

      This shift is closely linked to the rise of embedded and integrated payments. Uber was one of the first to do this, but increasingly, payments are being woven into the customer journey, rather than existing as a separate step. Successful solutions will be those that integrate seamlessly into customer journeys, leveraging data and partnerships to deliver the most relevant and value-added payment option in each scenario.

      Security and trust

      Despite the pace of innovation, one constant remains: customers must trust that their payments will work, every time.

      There are numerous recent and high-profile examples of how quickly trust can be eroded. Payment outages, data breaches, or high-profile fraud incidents can lead to widespread customer dissatisfaction, reputational damage and regulatory scrutiny. In an increasingly competitive market, customers have little tolerance for failure.

      This places a significant burden on firms, as the threat landscape continues to evolve and regulatory expectations are increasing. As a result, a substantial portion of firms’ payments modernisation budgets are being directed towards cyber security, fraud prevention, and operational resilience.

      The challenge for firms is to balance these security and resilience requirements with customer experience. Overly intrusive authentication processes or excessive friction can undermine the seamless experiences customers expect. Leading organisations are therefore investing in intelligent, risk-based controls, leveraging AI and real-time analytics to detect fraud without disrupting legitimate transactions, and 69% of firms are already exploring AI use cases to achieve this.

      Customer expectations for payments are being reshaped by a combination of convenience, context and trust. For banks and retailers, this should be front of mind when considering payments modernisation strategies. We have seen in this year’s Payments Modernisation report that focus is shifting from infrastructure upgrades to customer-centric transformation and technologies - delivering seamless, contextual and trusted payment experiences at scale. We expect this will only increase and welcome you to get in touch with KPMG’s Payments Consulting team to understand what this means for you and your customers.

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